Contact Table of Contents - ALTANA · ELANTAS Beck India Ltd., Pune (IND) 100 % 75 % ELANTAS...

Group Management Report46

Products80

Safety and Health84

Environment88

Human Resources92

Social Commitment95

Consolidated Financial Statements99

Corporate Report 2018

ALTANA AG

Abelstr. 43

46483 Wesel, Germany

Tel + 49 281 670 - 10900

Fax + 49 281 670 - 10999

www.altana.com

Contact

Corporate Communications

Tel + 49 281 670 - 10900

Fax + 49 281 670 - 10999

[email protected]

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Table of Contents

Letter from the Management Board

About This Report

Sustainability Management

Corporate Governance

Corporate Bodies and Management

Report of the Supervisory Board

Creating Added Value at ALTANA

Group Management Report

Group Basics

Business Development

Innovation and Employees

Subsequent Events

Expected Developments

Products

Safety and Health

Environment

Human Resources

Social Commitment

Consolidated Financial Statements

(condensed version)

Management Board Responsibility Statement

ALTANA Group Consolidated Income Statement

ALTANA Group Consolidated Statement of Financial Position

ALTANA Group Consolidated Statement of Cash Flows

Reference to the Consolidated Financial Statements

Multi-Year Overview

Global Compact: Communication on Progress (COP)

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7

11

14

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47

53

66

70

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84

88

92

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110

Credits

Publisher

ALTANA AG

Abelstr. 43, 46483 Wesel, Germany

Tel + 49 281 670 - 8

Fax + 49 281 670 - 10999

[email protected]

www.altana.com

Cover coated with ACTEGA

TERRACROSS special coating G 2 / 89 TC

Soft Touch; inside pages covered with

TerraGreen® Matt Coating G 5 / 75 matte

based on renewable raw materials of

ACTEGA Terra / formulated with additives

from BYK.

Design

Heisters & Partner

Corporate & Brand Communication, Mainz

Photography

Robert Brembeck, Munich (pp. 2, 26, 28 – 29,

34 – 38, 40 – 45)

ECKART GmbH (p. 27)

Grischa Rüschendorf, Hong Kong, CHN

(pp. 23 – 25, 30 – 33)

Martin Schmüdderich, Gelsenkirchen (p. 17)

Shutterstock (p. 22)

123 RF (p. 39)

Printing

G. Peschke Druckerei GmbH, Parsdorf

Legal DisclaimerThis Corporate Report is a translation of the Unternehmensbericht. The translation was prepared for convenience only. In case of any discrepancy between the German version and the English translation, the German version shall prevail.This report contains forward-looking statements, i. e. current estimates or expectations of future events or future results. The statements are based on beliefs of ALTANA as well as assumptions made by and infor -mation currently available to ALTANA. Forward-looking statements speak only as of the date they are made. ALTANA does not intend and does not assume any obligation to update forward-looking statements to refl ect facts, circumstances or events that have occurred or changed after such statements have been made.

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Group Profi le 2018

ALTANA’s divisions Key figures at a glance

2017 2018 ∆ %

in € million

Sales 2,247.0 2,307.4 3

Earnings before interest, taxes, depreciation and amortization (EBITDA) 470.0 430.6 - 8

EBITDA margin 20.9 % 18.7 %

Operating income (EBIT) 335.9 295.8 - 12

EBIT margin 14.9 % 12.8 %

Earnings before taxes (EBT) 306.0 264.1 - 14

EBT margin 13.6 % 11.4 %

Net income (EAT) 234.6 187.0 - 20

EAT margin 10.4 % 8.1 %

Research and development expenses 142.5 154.1 8

Capital expenditure on intangible assets and property, plant and equipment 188.0 187.0 - 1

Cash Flow from operating activities 302.3 296.2 - 2

Return on capital employed (ROCE) 11.3 % 9.4 %

ALTANA Value Added (AVA) 84.0 37.6 - 55

Dec. 31, 2017 Dec. 31, 2018 ∆ %

in € million

Total assets 3,147.7 3,221.9 2

Shareholders’ equity 2,214.2 2,344.6 6

Net debt (-) / Net financial assets (+) ¹ (78.0) ( 95.6) - 23

Headcount ² 6,186 6,428 4

¹ Comprises cash and cash equivalents, current financial assets, marketable securities, loans granted, debt, and employee benefit obligations.

² When in the following the term “headcount” or “employees” is used, it refers to all staff members, male, female, or otherwise.

Due to rounding, this Corporate Report may contain minor differences between single values, and sums or percentages.

2017 2018 ∆ %

WAI 1 (number of occupational accidents with lost work time of one day or more

per million working hours)

4.01 3.67 - 8

WAI 2 (number of occupational accidents with lost work time of more than three days


3.06 2.69 - 12

WAI 3 (number of lost work days due to occupational accidents per million working hours) 54.58 36.45 - 33

CO² total (Scope 1 + Scope 2) ³ (t) 187,548 193,085 3

CO² specific (Scope 1 + Scope 2) ³ (kg CO² / € gross value added) 0.21 0.21 0

CO² specific (Scope 1 + Scope 2) ³ (kg CO² / kg finished goods) 0.35 0.34 - 3

³ Scope1: direct emissions; Scope 2: indirect emissions

ALTANA worldwide

as of January 1, 2019 Sales Production

South America

ACTEGA do Brasil Tintas e Vernizes Ltda.,São Paulo (BRA)

100 %

ACTEGA Terra Chile Ltda.,Santiago de Chile (CHL)

100 %

U.S.

BYK USA Inc., Wallingford, CT

100 %

BYK Gardner USA, Columbia, MD

100 %

ECKART America Corp., Painesville, OH

100 %

ELANTAS PDG Inc., St. Louis, MO

100 %

ACTEGA North America Inc., Delran, NJ

100 %

ACTEGA North America Technologies Inc.,East Providence, RI100 %

Asia

BYK Asia Pacific Pte Ltd., Singapore (SGP)

100 %

BYK Japan KK, Tokyo (JPN)

100 %

BYK Additives (Shanghai) Co., Ltd., Shanghai (CHN)

100 %

BYK (Tongling) Co., Ltd., Tongling (CHN)

100 %

BYK India Private Ltd.,Mumbai (IND)

100 %

BYK Korea LLC,Gyeonggi-do (KOR)

100 %

ECKART Asia Ltd., Hong Kong (CHN)

100 %

ECKART Zhuhai Co., Ltd., Zhuhai (CHN)

100 %

ELANTAS Beck India Ltd., Pune (IND)

75 %

ELANTAS Malaysia Sdn Bhd, Kuala Lumpur (MYS)

100 %

ELANTAS (Tongling) Co., Ltd., Tongling (CHN)

100 %

ELANTAS (Zhuhai) Co., Ltd., Zhuhai (CHN)

100 %

ACTEGA Foshan Co., Ltd., Shunde (CHN)

100 %

Germany

ALTANA AG, Wesel

ALTANA Management Services GmbH, Wesel 100 %

BYK-Chemie GmbH, Wesel

100 %

ECKART GmbH, Hartenstein

100 %

ELANTAS GmbH, Wesel100 %

ACTEGA GmbH, Wesel100 %

BYK-Gardner GmbH, Geretsried

100 %

ELANTAS Europe GmbH, Hamburg

100 %

ACTEGA DS GmbH, Bremen

100 %

ACTEGA Metal Print GmbH,Lehrte 100 %

ACTEGA Rhenania GmbH, Grevenbroich

100 %

ACTEGA Terra GmbH, Lehrte

100 %

Europe

BYK Additives Ltd., Widnes (GBR)

100 %

BYK Netherlands B.V., Deventer (NLD)

100 %

ECKART Benelux B.V., Uden (NLD)

100 %

ECKART France SAS, Saint-Ouen (FRA)

100 %

ECKART Italia Srl. a Socio unico, Rivanazzano (ITA)

100 %

ECKART Pigments KY, Pori (FIN)

100 %

ECKART Suisse SA, Vétroz (CHE)

100 %

ELANTAS Europe Srl., Collecchio (ITA)

100 %

ACTEGA Artística S.A.U., Vigo (ESP)

100 %

ACTEGA Rhenacoat SAS, Sedan (FRA)

100 %

Central America

BYK Chemie de México, S. de R.L. de C.V., Cuautitlán Izcalli (MEX)

100 %

ELANTAS Isolantes Elétricos do Brasil Ltda., Cerquilho (BRA)

100 %

ECKART de México Industrias, S. de R.L. de C.V., Cuautitlán Izcalli (MEX)

100 %

Sales by region

in € million 2018

1 Europe 875.0

2 Americas 624.4

3 Asia 769.4

4 Other regions 38.6

Total 2,307.4

1

4

227.1 %37.9 %

1.7 % 333.3 %

Sales by division

in € million 2018

1 BYK 1,065.6

2 ECKART 382.6

3 ELANTAS 506.6

4 ACTEGA 352.6

Total 2,307.4

1

4

2

3

16.6 %

21.9 %

46.2 %

15.3 %


Products80

Safety and Health84

Environment88

Human Resources92

Social Commitment95



ALTANA AG

Abelstr. 43


Tel + 49 281 670 - 10900

Fax + 49 281 670 - 10999

www.altana.com

Contact


Tel + 49 281 670 - 10900

Fax + 49 281 670 - 10999

[email protected]

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Table of Contents


About This Report







Group Basics



Subsequent Events


Products

Safety and Health

Environment

Human Resources

Social Commitment


(condensed version)






Multi-Year Overview


1

6

7

11

14

16

21

46

47

53

66

70

71

80

84

88

92

95

99

100

101

102

104

106

108

110

Credits

Publisher

ALTANA AG


Tel + 49 281 670 - 8

Fax + 49 281 670 - 10999

[email protected]

www.altana.com







from BYK.

Design

Heisters & Partner


Photography


34 – 38, 40 – 45)

ECKART GmbH (p. 27)


(pp. 23 – 25, 30 – 33)



123 RF (p. 39)

Printing



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Group Profi le 2018


2017 2018 ∆ %

in € million

Sales 2,247.0 2,307.4 3






EBT margin 13.6 % 11.4 %

Net income (EAT) 234.6 187.0 - 20

EAT margin 10.4 % 8.1 %






Dec. 31, 2017 Dec. 31, 2018 ∆ %

in € million

Total assets 3,147.7 3,221.9 2



Headcount ² 6,186 6,428 4




2017 2018 ∆ %



4.01 3.67 - 8



3.06 2.69 - 12






ALTANA worldwide


South America


100 %


100 %

U.S.


100 %


100 %


100 %


100 %


100 %


Asia


100 %


100 %


100 %


100 %


100 %


100 %


100 %


100 %


75 %


100 %


100 %


100 %


100 %

Germany

ALTANA AG, Wesel



100 %


100 %




100 %


100 %


100 %



100 %


100 %

Europe


100 %


100 %


100 %


100 %


100 %


100 %


100 %


100 %


100 %


100 %

Central America


100 %


100 %


100 %

Sales by region

in € million 2018

1 Europe 875.0

2 Americas 624.4

3 Asia 769.4


Total 2,307.4

1

4

227.1 %37.9 %

1.7 % 333.3 %

Sales by division

in € million 2018

1 BYK 1,065.6

2 ECKART 382.6

3 ELANTAS 506.6

4 ACTEGA 352.6

Total 2,307.4

1

4

2

3

16.6 %

21.9 %

46.2 %

15.3 %

Dear Ladies and Gentlemen,

For the ALTANA Group, 2018 showed different dynamics in the course of the year. In the first half of the year, we were able to pick up on the momentum of the strong year 2017 and continue our dynamic growth, which was accompanied by an appealing margin development despite rising raw-materials prices. In the second half of the year, however, the demand became palpably more subdued, primarily due to the significant slowdown of the economy in important markets for us, including the automotive industry, the Middle East, and China. At the same time, we were confronted with substantially growing margin pressure due to the acceleration of raw-materials price increases.

Nevertheless, in 2018 we achieved our growth and sales targets in our divisions and thus for ALTANA as a whole, and we did so although our business environment became more and more challenging in the course of the year. However, our earnings in 2018 lagged behind our strong earnings in the previous year due to declining contribution mar-gins. The EBITDA margin reached our long-term target range of 18 to 20 percent.

Our outlook for 2019 is influenced by a macroeconomic environment characterized by ongoing uncertainty. The geopolitical framework conditions and trade disputes have dampened consumption and investment expectations in many countries. In this environ-ment, ALTANA must set the right priorities in order to remain on the path to sustainable profitable growth even in troubled waters. A look back at 2018 strengthens our con-viction that by striking a balance between cost discipline and meaningful investments in our future we can take the right path. Among other things, we made high-level invest-ments in property, plant and equipment by expanding our capacities in the additives segment in Gonzales, USA, and in Shanghai, China. In the period under review, we also made substantial investments that decisively enabled the Israeli company Landa Digital Printing to take further steps on the way to marketing its innovative and revolutionary printing solutions. With our participation in Velox, another startup in the digital printing sector, we also essentially strengthened our network in the field of promising technolo-gies. Moreover, we significantly stepped up expenditure for research and development once again and are making consistent progress in the digitalization of the ALTANA Group.

Management Board

ALTANA’s Management Board from left to right:

Stefan Genten, Martin Babilas (Chairman), Dr. Christoph Schlünken

2 Letter from the Management Board

We also made significant progress in the implementation of our Keep Changing Agenda. For example, we successfully completed the action field “Take the lead in sustainability.” Today, sustainability is becoming increasingly important as a competitive factor. The prerequisite for this is that sustainability is no longer viewed solely as environmental protection but, in keeping with our conviction, as a triad of economy, ecology, and social responsibility. To leverage the opportunities resulting from sustainability for ALTANA, we decisively strengthened the sustainability management at our sites by establishing system-atic sustainability criteria in relevant decision-making processes and with the help of many lighthouse projects around the globe. As a result, sustainability is no longer only an ambitious goal for us, but a fixed component of our business and working life. The importance of sustainability in our corporate action is also illustrated by the fact that as a member of the UN Global Compact ALTANA actively supports the objectives of this important initiative for company management.

Our environmental key performance indicators almost all underwent a positive devel-opment in the period under review. In terms of key accident figures, ALTANA also improved over the previous year. However, the targets we set ourselves for the reporting year could only be partially achieved. In order to further improve the results, in the future we will make the safety culture a stronger focus of our action.

In the spirit of “We are ALTANA,” in 2018 we as the ALTANA Group once again did every-thing possible to create added value for our customers and employees, for our owner and society as a whole. This is shown by the articles in the magazine section of our corporate report. This time the spectrum of examples ranges from innovative solutions and unique effect pigments for the automotive and consumer goods industry, to invest-ments in sustainable growth at our sites and sophisticated solutions for e-mo bility, to systematic talent management concepts and educational mentorships for socially dis-advantaged children. They all illustrate our aim to promote cooperation with each other and the interaction of different talents, gifts, and abilities in the best possible way for first-class customer loyalty, innovative top performances, and sustainable solutions. For in the end it is the people at ALTANA who make the difference, and they are there-fore the most important recipe for success for our company.

3Letter from the Management Board

It remains of overriding importance for us to find the right mixture of continuity and change, which is necessary for a productive development of the ALTANA Group. In the process, we have every possibility to transform the challenges that lie ahead into new opportunities and possibilities with technological innovations and our unmistakable corporate culture, based on our own financial strength as a company.

We would like to warmly thank our employees for their contribution to the success and development of ALTANA in the 2018 fiscal year. Thanks also go to the members of the Supervisory Board for their constructive accompaniment and their trust in ALTANA’s work.

Martin Babilas Stefan Genten Dr. Christoph Schlünken

4 Letter from the Management Board

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About This Report






The Corporate Report for 2018 encompasses the annual and

sustainability reports. With it, the ALTANA Group informs

the public, its employees and business partners, as well as

public authorities, nongovernmental organizations, and

all other interested parties about the Group’s development in

economic, ecological, and social respects. In addition to the

Group Management Report and the Consolidated Financial

Statements (condensed version), as well as information on

the Group’s corporate governance, this report contains a de-

scription of ALTANA’s understanding of sustainable man-

agement and the progress the Group has made in implement-

ing it in the past fiscal year. As a result, this report for

2018 updates the content that was published in the 2017

Corporate Report (published on March 16, 2018). At

the same time, it serves as the annual Communication on

Progress of Global Compact.

The Reporting Period

All financial and human-resource information in the Group

Management Report and the Consolidated Financial State-

ments for 2018 refer to the period from January 1 to Decem-

ber 31.

The reporting period for the environmental key perfor-

mance indicators changed. They are based on values that

were collected between January 1 and December 31, 2018

(previous year: October 1, 2016 to September 30, 2017).

As in the previous year, the data on occupational health and

safety refer to the period from January 1 to December 31.

About This Report

Reporting Principles

In terms of the Group Management Report and the Consoli-

dated Financial Statements, the report adheres to the speci-

fications of the International Financial Reporting Standards

(IFRS), as adopted by the EU, and the additional require-

ments of German commercial law pursuant to section 315 e

of the German Commercial Code (HGB). As in the previ-

ous years, this was audited and confirmed by an independent

auditor. The complete Consolidated Financial Statements

including the Notes to the Consolidated Financial Statements

are available online at www.altana.com/consolidated_finan-

cial_statements_2018.

This corporate report has been prepared in accordance

with the GRI Standards: Comprehensive option. It is also ori-

ented to the International Integrated Reporting Council’s

(IIRC) reporting framework. In 2018, ALTANA did not have the

key performance indicators based on the standards of

the Global Reporting Initiative (GRI) tested by an indepen-

dent auditor. Detailed information is available online at

www.altana.com/facts_figures_sustainability_2018.

Information on the selection of content based on GRI

Standards and regarding the definition of sustainability issues

important for the ALTANA Group and its stakeholders can

be found in the “Sustainability Management” section (page 7

of this report). A detailed list of all criteria based on the GRI

Standards that ALTANA provides information about is avail-

able online at www.altana.com/facts_figures_sustain-

ability_2018.

This report is available in German and English.

6 About This Report

ALTANA’s Understanding of Sustainability

ALTANA consistently gears its activities to sustained profitable

growth. But we can only achieve economic success in the

long run if we also bear in mind ecological and social aspects

and anchor them firmly in our company.

Our understanding of sustainability as a triad of econo-

my, ecology, and corporate social responsibility is also reflect-

ed in ALTANA’s mission:

We provide innovative solutions based on integrated chemical,

formulation, and application expertise that make products of

daily life better and more sustainable.

Our solutions open up growth or savings potential for our

customers and can change entire markets.

As a result, we create value for our customers, employees,

shareholder, and society as a whole.

The View of Our Stakeholders

As a globally manufacturing specialty chemicals company,

ALTANA has diverse stakeholders with whom the Group and

its different companies maintain regular contact and ex-

change. The content and results of these dialogs are among

the factors that inform ALTANA’s understanding of sustain-

ability.

Among ALTANA’s most important stakeholders are

its customers, employees, owner, suppliers, other business

partners, authorities, associations, and nongovernmental

organizations (NGOs), as well as our neighbors at the differ-

ent sites.

In the year under review, the stakeholder analysis

we performed in 2017 was examined and the key sustain-

ability issues were still considered relevant for ALTANA.

ALTANA’s Environment, Health & Safety (EH&S) and Corpo-

rate Communications departments developed with external

support a materiality matrix with 13 criteria.

In the matrix, all topics relating to the GRI Standards,

existing stakeholder analyses, ALTANA’s Keep Changing

Agenda for the future, as well as selected best practices in

the form of reports and studies were considered.

Throughout the process of developing the materiality

matrix, topics were prioritized based on their relevance to

stakeholder decisions and the consequences for the ALTANA

Group (see graphic on the following page).

The stakeholders incorporated in the materiality matrix,

which were identified based on high relevance, came from

the areas of customers, suppliers, NGOs, foundations, politics,

and institutions. Internally, EH&S, Corporate Communica-

tions, Strategy, Procurement, Research and Development,

Finances and Controlling, Engineering, and Sales were in-

corporated. ALTANA will continue to update the materiality

matrix on a regular basis.

Objective Evaluation of Sustainability

To be able to measure not only the company’s business per-

formance but also its involvement in all areas of sustainability,

alongside key performance indicators and certified manage-

ment systems, ALTANA is using objective external evaluations

increasingly. The assessments of the chemical industry rating

company EcoVadis play a special role. In 2018, ELANTAS Beck

India, ECKART America, and BYK Additives at the Widnes

site were evaluated by EcoVadis. As a result, ALTANA contin-

ued its successful series of assessments.

EcoVadis, which analyzes environmental aspects, pro-

curement policy, compliance, and working conditions of

companies based on the international sustainability guideline

ISO 26000, has become one of the world’s leading rating


7Sustainability Management

Sustainable Development Goals

ALTANA has been a member of the UN Global Compact

since 2010 and commits to integrating the ten principles

into the company and to observing the general goals of

the United Nations (see the Communication on Progress

of Global Compact on page 110).

At the summit meeting on September 25, 2015, the

193 member states resolved the 2030 Agenda for Sustain-

able Development. 17 Sustainable Development Goals

(SDGs) and a total of 169 targets were defined. The imple-

mentation phase began on January 1, 2016, and will end

15 years later in 2030.

In the meantime, many institutions and companies

have joined the Sustainable Development Goals initiative

and launched programs to reach the objectives. ALTANA

supports this United Nations plan, and, in a first step, deter-

platforms for the chemical industry. More than 20,000 com-

panies are now registered with it.

Organization of Sustainability

At ALTANA, the Group’s operating companies are responsible

for implementing and anchoring sustainability. The indivi-

dual companies are committed to continually reducing the

environmental effects of the Group and to improving safety

at the respective sites. Furthermore, the individual sites are

required to introduce suitable management systems and have

them certified.

Moreover, special, cross-divisional expert platforms ex-

change information on relevant EH&S topics (for example

energy, sustainability performance, and contact with food)

and present best-practice models.

ALTANA Materiality Matrix

Significance – perspective of ALTANA

Sign

ifica

nce

– pe

rspe

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ext

erna

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keho

lder

s

Reduction of effluents and waste

Health and safety of customers

Clean energy and greenhouse gas emissions reduction

Occupational health and safety

Direct economic value for customers, employees, owner, and society as a whole

Innovative solutions to exploit growth and savings potential for customers

Responsible supply chain management

Compliance

Diversity and equal opportunity

Attracting and maintaining a skilled workforce

Employee-oriented management

Water efficiency

Renewable and recycled materials

8 Sustainability Management

UN Sustainable Development Goals (SDG s)

mined the goals that are most important for the ALTANA

Group in a survey. For this purpose, managers and employ-

ees were invited to evaluate the importance of the 17

goals for ALTANA now and in the future. Based on this sur-

vey, the goals presented on the next page were developed

for ALTANA.

Descriptions, objectives, and results of the Sustainable

Development Goals defined for ALTANA can be found

in the chapters of the 2018 Corporate Report indicated and

in the online document “Facts and Figures on Sustainability

2018.”

9Sustainability Management

SDG s with special relevance for ALTANA

Occupational Health and SafetyFor ALTANA, the health and safety of its employees is a top priority. All of its worldwide sites have established their own safety organi-zation, which includes adherence to all local occupational safety regulations, training mea-sures, as well as recording and evaluating accidents and near accidents. ALTANA uses the

Work Accident Indicator (WAI) as the most important key performance indicator in order to observe the development of occupational safety at all sites and to continually improve it. Further information can be found in the “Health and Safety” chapter, in the accident key performance indicators with the targets, as well as in the Manage-ment Approach “Occupational Health and Safety.”

Training and EducationOur employees are our most important resource. ALTANA therefore promotes their pro-fessional development, prepares them for leadership positions, and enables them to par-ticipate in the company’s economic success in order to retain them in the long term. A spe-cial focus is on recruiting young, specialized,

and managerial staff. Further information can be found in the “Human Resources” chapter, in the GRI Content Index, and in the Manage-ment Approach “Employee-Oriented Management.”

Gender EqualityPromoting women in leadership positions remains a focus at ALTANA. By founding a number of initiatives, including LEADING WOMEN @ ALTANA and Mentoring for Women, ALTANA seeks in the medium term to increase the share of women in leadership posi-tions to the percentage of women among

all the company’s employees. Further information can be found in the “Human Resources” chapter, in the Group Management Report, in the human resources key performance indicators, and in the Manage- ment Approach “Employee-Oriented Management.”

Sustainable Economic Growth and Decent WorkOur customers’ success is at the center of ALTANA’s business activities. We can only be successful in the competitive environment in the long run if we offer our customers added value. We not only aim to secure long-term economic success, but to be sustain-

able in every respect. As a member of the UN Global Compact, ALTANA therefore actively supports the targets of responsible corporate man-agement. Further information can be found in the Group Management Report, in the Communication on Progress of the UN Global Compact, and in the Management Approaches “Strategy,” “Compliance,” and “Employee-Oriented Management.”

Innovation: New Products and TechnologiesALTANA’s products and services are geared to offering its customers special sustainable solu-tions and to enable them to gain a competi-tive advantage. To keep or to extend its posi-tion as a leading specialty chemicals company, the ALTANA Group intends to continually

expand its competencies. To achieve this goal, ALTANA steadily grows its product portfolio through its own developments, as well as through acquisitions and cooperation with other companies, universities, and research institutes. Further information can be found in the “Products” and “Innovation and Employees” chapters, as well as in the Man- agement Approach “Innovative Solutions.”

Climate Protection MeasuresEcologically sound economic activity is a key component of ALTANA’s corporate strategy. Our goal is to continually reduce the energy consumption and emissions at all of our sites and to use resources efficiently. In addi-tion, ALTANA’s products contribute to improving climate protection in the value chain.

ALTANA controls the Group’s efficiency regarding energy consump-tion and the resulting CO² emissions with the help of defined perfor-mance indicators and defined targets. Further information can be found in the “Environment” and “Products” chapters as well as in the environmental performance indicators with targets in the Manage- ment Approaches “Energy” and “Emissions.”

10 Sustainability Management


Good corporate governance is a basis for the sustainable suc-

cess of ALTANA. Even as a company not listed on the stock

exchange, ALTANA orients itself to the rules of the German

Corporate Governance Code.

At least once a year, the Supervisory and Management

Boards deal with the regulations of the German Corporate

Governance Code and examine which recommendations and

suggestions ALTANA can follow even as a company not

listed on the stock exchange and sensibly apply within the

company given its shareholder structure.

ALTANA follows, or will follow, the vast majority of

the applicable recommendations of the German Corporate

Governance Code in the current version of February 7,

2017. This especially applies to the recommendations re-

garding the cooperation between the Management

Board and the Supervisory Board, the cooperation between

the Chairman of the Supervisory Board and the Super-

visory Board plenum, dealings with conflicts of interest of

the Supervisory Board members, the setting up and

composition of the committees, as well as matters relating

to the audit.

Management and Control

The Management Board of ALTANA AG consists of three

members, who are appointed by the Supervisory Board for

a period of five years. The selection criteria include experi-

ence, business and professional expertise, as well as compe-

tence in ecology and social responsibility. Considerations

regarding diversity also play a role in the selection process.

The Management Board members manage the Group in-

dependently and are solely committed to the interests of the

company. Together with the presidents of the divisions and

selected heads of central functional areas, the Management

Board forms the Executive Management Team. In regular

meetings, this team discusses and analyzes the development

of business and important business incidents, as well as

plans for the Group’s future development and sustainability

issues.

The company’s Supervisory Board has twelve members.

Half of them are employee representatives, elected by Group

employees in Germany in accordance with the German

Codetermination Act. The remaining six members are elected

by the Annual General Meeting. Experience and expertise,

as well as independence, are also important criteria in the

selection of the members of the Supervisory Board. They

are normally elected for a period of five years. The Manage-

ment Board reports to the Supervisory Board regularly,

without delay, and comprehensively on all issues relevant for

the company regarding business development, risks, and

planning, and discusses ALTANA’s strategy with the Supervi-

sory Board. Sustainability issues are also discussed regularly

at the Supervisory Board meetings. The Supervisory Board

monitors and advises the Management Board in its man-

agement activities. The Supervisory Board’s tasks also include

approving the annual financial statements. Specially defined

business decisions of the company, such as major acquisitions

and divestments, require the approval of the Supervisory

Board, in accordance with a list of transactions that are sub-

ject to authorization.

The Supervisory Board formed an Audit Committee,

a Human Resources Committee, and a Mediation Committee,

legally required in accordance with section 27 (3) of the

German Codetermination Act. Each committee consists of

two shareholder representatives and two employee repre-

sentatives. The Chairman of the Human Resources Commit-

tee and the Mediation Committee is the Chairman of the

Supervi sory Board, Dr. Klaus-Jürgen Schmieder. Since the An-

nual General Meeting on March 15, 2018, Dr. Jens Schulte

has been the chairman of the Audit Committee. He has the

necessary knowledge and expertise in the fields of account-

ing and auditing in accordance with the German Stock Cor-

poration Act.

11Corporate Governance

There is a D&O liability insurance scheme for members of

the Management and Supervisory Boards. The insurance cov-

ers personal liability risks in the event that a claim is made

against members of the Management and Supervisory Boards

while they are performing their activities. The insurance

contract stipulates a deductible of ten percent of the damages,

but a maximum of one-and-a-half times the amount of

the fixed annual compensation of the respective member of

the Management or Supervisory Board per insurance year.

Further information on the compensation of the Management

and Supervisory Boards can be found on page 72 f. of

the online Consolidated Financial Statements.

Compliance

The trust of our business partners and customers, as well as

the public, in the lawful and responsible behavior of the

ALTANA Group and its employees is decisive for the success

and reputation of the company. Compliance is therefore

extremely important for ALTANA.

Since 2008, ALTANA has had a so-called Compliance

Management System (CMS). It aims to ensure that its com-

panies abide by the laws, regulations, and internal com-

pany rules the non-observance of which can pose consider-

able risks for the company. The objective of the CMS is

therefore to identify the primary risks that can arise through

violations of laws and rules, to ensure that the employees

are trained regarding the content and meaning of the rele-

vant laws and regulations, and to assure that measures

are taken to prevent infringements of laws and internal regu-

lations.

Furthermore, the CMS aims to ensure that the neces-

sary control mechanisms are implemented so that violations

of laws and rules can be detected and terminated. The

CMS encompasses nine compliance areas, including corrup-

tion, antitrust law, environmental protection and safety,

human resources, customs and foreign trade, data protection,

financial reporting, as well as taxes.

The ALTANA CMS follows the ALTANA structure and is

therefore decentralized. The local managing directors and the

local management are primarily responsible for making sure

that the individual subsidiaries and their employees behave in

accordance with the rules. ALTANA AG lives up to its re-

sponsibility of ensuring compliance by providing a framework,

making competencies and tools available, creating platforms

and forums for local authorities, and by taking concrete mea-

sures to ensure compliance on the part of the management

of subsidiaries or to impose minimum requirements, espe-

cially through guidelines that are binding Group-wide.

ALTANA’s Code of Conduct, which holds for the entire

company, contains binding rules regarding responsible,

ethical, and lawful behavior for all staff members. This applies

in particular to issues such as corruption, conflicts of inter-

est, antitrust law, environmental protection, and discrimina-

tion. Together with the company’s Guiding Principles, the

Code of Conduct provides orientation for responsible corpo-

rate action. The Code of Conduct and the Guiding Princi-

ples are published on our website (www.altana.com). Since

2010, ALTANA’s employees have been trained with the

help of an e-learning program regarding the content of the

Code of Conduct and further issues relevant to compliance

such as corruption and bribery, as well as competition law

issues. In 2018, around 4,200 employees completed the

Code of Conduct training program.

Moreover, for each compliance area further specific

measures have been developed and implemented to ensure

that laws and internal regulations are adhered to. This

includes, for example, an IT-assisted system with whose help

business partners that support ALTANA AG and its subsid-

iaries in sales or in their cooperation are examined for poten-

tial compliance risks.

12 Corporate Governance

Another important element to guarantee the effectiveness

of the CMS is the work of Internal Audit. For a few years

now, compliance programs have been carried out regularly

at ALTANA and its subsidiaries.

With the ALTANA Compliance Hotline, ALTANA provides

another central means of ensuring compliance. The latter

gives employees as well as external third parties the possibil-

ity of reporting illegal behavior, if need be, anonymously.

Once a year, the Audit Committee receives a written

report on compliance that is presented and discussed in

a meeting of the committee in addition to the other proceed-

ings. The report gives an overview of the risks identified

for each compliance area, as well as already implemented

or planned measures to advance the system. The Audit

Committee is also informed about compliance violations.

ALTANA joined the UN Global Compact initiative,

whose members are voluntarily committed to adhering to

social and environmental standards as well as the protec-

tion of human rights. By joining Global Compact, ALTANA

has not only acknowledged its principles but also shown

a general commitment to support and promote overall UN

aims.

13Corporate Governance

The Executive Management Team

The Executive Management Team is an advisory body in

which strategic and operative issues that are important for

ALTANA and the divisions are discussed and deliberated

on. In addition to the members of the Management Board,

the Executive Management Team includes the four pres-

idents of the divisions as well as selected executives of

the company.

(in alphabetical order)

Jörg Bauer

Vice President Human Resources

Dr. Guido Forstbach

President Division ELANTAS

Dr. Stephan Glander

President Division BYK

Thorsten Kröller

President Division ACTEGA

Volker Mansfeld

Head of Corporate Development

Dr. Wolfgang Schütt

President Division ECKART

Dr. Petra Severit

Chief Technology Officer

The Management Board

Martin Babilas

Chairman

Responsibility:

– ELANTAS Division

– ACTEGA Division

– Corporate Development

– Human Resources

– Digital Transformation

– Corporate Communications

– Internal Audit

Stefan Genten

Responsibility:

– Controlling

– Accounting

– Corporate Finance / Treasury

– Tax

– Information Technology

– Legal / Patents

– Compliance

Dr. Christoph Schlünken

Responsibility:

– BYK Division

– ECKART Division

– Innovation Management

– Key Account Management

– ALTANA Excellence

– Environment, Health & Safety

– Procurement


14 Corporate Bodies and Management

The Supervisory Board

Dr. Klaus-Jürgen Schmieder

Chairman

Ulrich Gajewiak ¹

Deputy Chairman

Susanne Klatten

Deputy Chairwoman

Dr. Anette Brüne ¹

Dr. Monika Engel-Bader

Armin Glashauser ¹

Klaus Koch ¹

Beate Schlaven ¹

Dr. Jens Schulte

Dr. Antonio Trius

Stefan Weis ¹

Dr. Matthias L. Wolfgruber

Supervisory Board Committees

The Supervisory Board of ALTANA AG has established

the following committees:

Human Resources Committee

Dr. Klaus-Jürgen Schmieder (Chairman)

Ulrich Gajewiak

Susanne Klatten

Beate Schlaven

Audit Committee

Dr. Jens Schulte (Chairman)

Armin Glashauser

Dr. Antonio Trius

Stefan Weis

Mediation Committee

(in accordance with section 27 (3) of the German

Codetermination Act)

Dr. Klaus-Jürgen Schmieder (Chairman)

Ulrich Gajewiak

Susanne Klatten

Klaus Koch

¹ Employee representative

As of March 2019 in each case; details on the corporate bodies can be found in the online Consolidated Financial Statements (www.altana.com /consolidated_financial_statements_2018) page 75 ff.

15Corporate Bodies and Management


The Supervisory Board of ALTANA AG, carrying out the functions stipulated by law and the

Articles of Association, closely followed the work of the Management Board again in 2018.

The Supervisory Board dealt in depth with the situation and development of the company

as well as with various special issues. The Supervisory Board was regularly informed by the

Management Board about the respective agenda items through presentations and oral

reports in meetings. The Supervisory Board also regularly received additional written reports.

Between Supervisory Board meetings, the Chairman of the Management Board informed

the Chairman of the Supervisory Board about significant developments and events, and dis-

cussed pending or planned decisions with him. The Supervisory Board was involved in all

major company decisions.

Meetings of the Supervisory Board

In the 2018 fiscal year, the Supervisory Board held four regular meetings and one constitutive

meeting. At the meetings, the economic situation and the development perspectives of

the ALTANA Group, as well as important business events, were discussed and deliberated on

in detail. In addition to regular reporting on ALTANA’s sales, earnings, and financial devel-

opment, the Supervisory Board dealt in depth with the strategy of ALTANA and its individual

divisions. Furthermore, the Supervisory Board dealt with ALTANA’s Digital Transformation,

the Group’s IT strategy, as well as personnel development and projects of the ALTANA Institute.

The Supervisory Board also accompanied ALTANA’s further investments in the Israeli Landa

Corporation of 100 million U.S. dollars. At its December meeting, the Supervisory Board dealt

extensively with corporate planning for the coming years and with the budget for 2019,

which it approved. At the constitutive meeting, which was held following the Ordinary Annual

General Meeting in March of 2018, members of the Supervisory Board were appointed or

reappointed to different committees or as deputy Supervisory Board chairpeople.

Meetings of the Committees

The Human Resources Committee met thrice in the year under review. It dealt primarily with

issues pertaining to compensation. The Audit Committee met twice in the 2018 fiscal year.

In the presence of the auditor as well as members of the Management Board, the Audit Com-

mittee discussed the annual financial statements of ALTANA AG and the ALTANA Group. In

addition, it dealt with the statutory audit process mandating the auditor, the setting of audit

fees, monitoring the auditor’s independence, and the approval of non-auditing services of

16 Report of the Supervisory Board

the auditor. Furthermore, the Audit Committee addressed the identification and monitoring

of risks in the Group, the Group’s internal auditing activities, as well as ALTANA’s Compli-

ance Management System. The Mediation Committee, established in accordance with sec-

tion 27 (3) of the German Codetermination Act, did not convene in the 2018 fiscal year.

Annual Financial Statements

The annual financial statements of ALTANA AG, the consolidated financial statements for the

year ended December 31, 2018, and the management report of ALTANA AG, as well as

the Group management report, were audited by PricewaterhouseCoopers GmbH Wirtschafts-

prüfungsgesellschaft, which was appointed by the Annual General Meeting and engaged

by the Audit Committee of the Supervisory Board, and it issued an unqualified audit opinion

in each case. The system for early risk recognition set up for the ALTANA Group pursuant

to section 91 of the German Stock Corporation Act was audited. The examination revealed

that the system is capable of fulfilling its objectives.

Dr. Klaus-Jürgen Schmieder, Chairman of the Supervisory Board of ALTANA AG

17Report of the Supervisory Board

The financial statement documentation, the Corporate Report, the reports of Pricewater-

houseCoopers GmbH Wirtschaftsprüfungsgesellschaft on the audit of the annual financial

statements and the consolidated financial statements, as well as the Management Board’s

proposal for the distribution of the profit, were made available to all Supervisory Board mem-

bers. The Audit Committee of the Supervisory Board dealt at length with this documenta-

tion. The Supervisory Board plenum inspected the documentation and dealt with it in depth

at its balance sheet meeting in the presence of the auditor, who reported on the main

results of the examination. The Supervisory Board is in agreement with the findings of the

audit. Following its final examination, it has no grounds for objection. At its meeting of

March 12, 2019, the Supervisory Board approved the annual financial statements and con-

solidated financial statements prepared by the Management Board. The annual financial

statements are thereby adopted. The Supervisory Board evaluated the Management Board’s

proposal for the distribution of the profit and is in agreement with its recommendation.

Report in Accordance with Section 312 of the German Stock Corporation Act

The Management Board prepared a report in accordance with section 312 of the German

Stock Corporation Act on relations with affiliated companies for the 2018 fiscal year. The

Supervisory Board inspected this report and found it to be accurate. The auditor issued the

following audit opinion:

“On completion of our audit and assessment in accordance with professional standards,

we confirm that the factual statements of the report are correct and that the consideration

paid by the company for the legal transactions in the report was not inappropriately high.”

The Supervisory Board approved the auditor’s findings. Following the completion of its

own review, the Supervisory Board has no objections to the Management Board’s statement

at the end of the report.

Personnel Changes

With the end of the Ordinary Annual General Meeting of ALTANA AG on March 15, 2018,

the tenures on the Supervisory Board of Susanne Klatten, Dr. Lothar Steinebach, and the

employee representatives came to an end. Within the framework of the election of employee

representatives in the Supervisory Board on January 30, 2018, Dr. Annette Brüne, as well

as Ulrich Gajewiak, Armin Glashauser, Klaus Koch, and Stefan Weis, were reappointed as

18 Report of the Supervisory Board

members of the Supervisory Board. Beate Schlaven was elected as an employee represen-

tative in the board for the first time. Olaf Jung departed from the board. The Ordinary Annual

General Meeting reappointed Susanne Klatten and appointed Dr. Jens Schulte for the

first time as members of the Supervisory Board. The tenure of the newly appointed and re-

appointed members of the Supervisory Board began with the end of the Annual General

Meeting on March 15, 2018. The Supervisory Board reappointed Ulrich Gajewiak and Susanne

Klatten as deputy chairman and deputy chairwoman of the Supervisory Board. The Super-

visory Board reappointed Ulrich Gajewiak and Susanne Klatten as members of the Human

Resources Committee, and appointed Beate Schlaven as a member of said committee for

the first time. Dr. Jens Schulte was appointed as Chairman of the Audit Committee, succeed-

ing Dr. Lothar Steinebach. Armin Glashauser and Stefan Weis were reappointed as members

of the Audit Committee. The Supervisory Board reappointed Susanne Klatten and Klaus Koch

to the Mediation Committee.

The Supervisory Board would like to express its gratitude to Lothar Steinebach and Olaf

Jung for the good and trusting cooperation. The Supervisory Board would also like to thank

the members of the Management Board, the company’s management, and the Group’s em-

ployees for their achievements and commitment during the last fiscal year.

Wesel, March 12, 2019

For the Supervisory Board

Dr. Klaus-Jürgen Schmieder

Chairman

19Report of the Supervisory Board


At ALTANA, we create added value for our customers, employees, owner, and society as a whole through our close proximity to customers, innovative top achievements, and sustainable solutions. To this end, we invest in future technologies, expand in growth markets, establish consistent and global promotion of internal talent, and always have our customers in mind in everything we do. On the following pages you can read how we manage to create added value in concrete cases.

22

26

30

34

38

42

FROM GLOBAL SUCCESS TO LOCAL GROWTH – “The Rising Dragon”

FROM RESEARCH TO ADDED VALUE – “Turning Molecules Around”

FROM TALENT TO LEADERSHIP – “Strengthening Global Thinking”

FROM INVESTMENT TO EXCELLENCE – “Change to Lead”

FROM OFFERING SOLUTIONS TO CLEAN AIR – “Picking up Speed Sustainably”

FROM CURIOSITY TO CONFIDENCE – “Leon Is Now on the Ball”

FROM GLOBAL SUCCESS

The ALTANA Group has a presence around

the globe with 47 manufacturing sites

as well as 60 service and research labora

tory sites. We currently generate 88 per

cent of our sales outside of Germany. Ac

counting for 33 percent of ALTANA’s

total sales, Asia is one of our biggest re

gional growth drivers. China now com

prises 18 percent of the company’s sales,

making it the company’s secondlargest

sales market. The ALTANA Group is steadi

ly extending its position in Asia, includ

ing at the Tongling site of its biggest busi

ness division, BYK, and at BYK’s new site

at Shanghai Chemical Industry Park.

ALTANA is paving the way for sus-

tainable profitable growth by acquir-

ing business activities, through inno-

vative technologies, and by investing

strongly in its core business. Thanks

to our excellent financial position, we

can implement our growth strategy

consistently and successfully.

TO LOCAL GROWTH

“THE RISING DRAGON”The ALTANA Group is investing substantially in Asia’s growth markets. BYK is not only expanding its site in Tongling, but is also establishing a new site in Shanghai Chemical Industry Park. With manufacturing, research and development (R&D), and service right at our customers’ sites, we are generating added value for our stakeholders.

From small outposts in Asia to one of the main pillars of the

ALTANA Group, today the Asia region is providing key added val

ue for our company, accounting for around a third of our total

sales and recording aboveaverage growth rates. The central in

vestment focus is China with the Tongling site of ALTANA’s larg

est division, BYK. In addition, BYK has a new site in Shanghai

Chemical Industry Park (SCIP). The name “The Rising Dragon”

gives an indication of the strategic importance of the SCIP and

Tongling projects. “With the new site at Shanghai Chemical

Industry Park we are extending our leading position in R&D, tech

nical customer service, manufacturing, and logistics, right at

our customers’ sites in China,” says Kreece Zhang, CFO of BYK

Additives Shanghai.

The strengthening of production and the supplychain com

petence locally, the consistent expansion of the product port

folio to meet the needs of the local market, the enlargement of

Modern, cosmopolitan, and functional – BYK’s new site in Shanghai Chemical Industry Park (SCIP). The 50,000 square meter property has sufficient space for R&D, technical service, logistics, administration, and not least storage space.

2424 Creating Added Value at ALTANA

local sales teams, and investments in labs in China are bolster

ing our competitive position. In addition, different functions are

being brought together under one roof at the integrated site in

Shanghai.

Strengthening China as a Site for Our Business

“Hence we are meeting our customer’s growing requirements

regarding innovative strength, product and manufacturing quali

ty, as well as service orientation. Last but not least, the increase

in capacity on the part of our local Chinese customers is an im

portant signal reflecting greater customer satisfaction,” adds

Kreece Zhang.

R&D, application laboratories, technical service, logistics,

and administration are concentrated on a piece of property en

compassing 50,000 square meters. The new site in Shanghai

will be officially inaugurated in April 2019. In a second phase, a

new manufacturing site is to be built there starting in 2021. In

September 2018, the first sod was turned for the expansion of

the Tongling site. “Demand for our additives is so high that we

have to swiftly push forward the capacity expansion,” says

Jing Wang, site manager at BYK Tongling. Among other things,

new reaction and dilution vessels are planned, as well as

the required factory hall, the expansion of the tank farm, and a

new warehouse. The manufacturing capacity is to be qua

drupled.

Investment of Almost 50 Million Euros

“The capacity expansion enables us to offer individual product

solutions for the Chinese market,” says Jing Wang. “And that’s

exactly what our customers want. The demand is there. So we

can decisively enhance our competitiveness.” The new capacities

are slated to be ready for operation next year.

The ALTANA Group is creating the prerequisites for further

growth in Asia. To this end, we are investing heavily. A total

of almost 50 million euros have been allocated for the newly inte

grated site in Shanghai and to strengthen the Tongling site by

expanding the manufacturing facilities there – to give “The Rising

Dragon” a sufficient boost.

Exchanging ideas – Jing Wang, site manager at BYK Tongling, and Kreece Zhang, CFO of BYK Additives (photos in the middle and on the right), work at the Tongling and Shanghai sites. The BYK division is making investments to strengthen its competitive position in China.

2525Creating Added Value at ALTANA

FROM RESEARCH

The ALTANA Group’s products offer cus

tomers around the world specialty chem

ical solutions that make products used

in daily life better and more sustainable.

This helps boost our customers’ compet

itiveness. The ALTANA Group’s innovative

strength gives its stakeholders decisive

added value. One solution providing the

necessary added value is METALURE®

Liquid Black, an ECKART effect pigment

with unique liveliness and gloss. But the

spectacular effect is not the only aspect

that is impressive. The product has a

wide range of uses in both aqueous and

solventbased coating systems, and, last

but not least, improves automobile recy

clability in accordance with the new

norms.

Leading in everything we do – this

applies particularly to the ALTANA

Group’s diverse products. Innovative

and sustainable solutions for our

customers make an important contri-

bution toward strengthening our

competitive position and conserving

resources.

TO ADDED VALUE

“TURNING MOLECULES AROUND” ECKART, the effect pigment specialist in the ALTANA Group, has successfully proved its innovativeness with METALURE® Liquid Black – and created the necessary added value for our customers.

Complete light absorption makes objects look matteblack.

Now ECKART has managed to find the optimal compromise be

tween absorption and metallic reflection. The unique effect

pigment METALURE® Liquid Black combines a deep black appear

ance with high metallic gloss.

For the patented effect pigment, ECKART uses chrome,

which, coupled with an elaborate metallization process, enables a

deepdark, jetblack mirror effect. “We discovered this highly

dramatic effect when we dealt intensively with the question of

how to achieve new effects with the smallest pieces of metal

and thus expand the color space,” says Dieter Prölß, head of

Technology and Process Development at ECKART.

The Idea: Chrome Instead of Aluminum

Before the invention of METALURE® Liquid Black, the PVD (physical

vapor deposition) standard pigment portfolio was based on

aluminum. The metal is evaporated in semitransparent layers on

a film, removed, and subsequently reduced to the desired pig

ment size. However, the pigments should not only become more

and more brilliant, but also darker for a silvery shine and ever

A unique, highly dramatic effect of METALURE® Liquid Black – made possible by a special elaborate metallization process. After chrome is evaporated on a film and wound on rolls, at the end the metallized layer is reduced to pigment size and then can be added to paints and coatings.


thinner. But in using aluminum ECKART came up against a natu

ral physical border, as the metal cannot be evaporated to be

come as thin as desired.

An alternative was needed. “We got the idea of trying it

with chrome,” says Wolfgang Herzing, the group manager at the

technology center. The metal chrome is characterized by high

chemical stability and its high metallic gloss, known particularly

from the automotive sector (on trim, for example).

Chrome is evaporated onto a fi lm reactively in an oxygen

atmosphere; the further pigment manufacture occurs analogous

to the process of manufacturing PVD aluminum pigments.

Since demand for the product is currently increasing, the produc

tion capacities were already expanded.

Highly Dramatic Effect

The patented effect pigment METALURE® Liquid Black has a

wide range of uses. It can be applied to coat outdoor objects

(for instance, automobile bodies) and also has applications in

the premium consumer goods segment. For example, it can be

used to coat speedometers in the automotive industry. It is not

only the highly dramatic “black metallic effect” that is impressive,

but also the color fastness under strong UV light.

Years of Research and Development Work

ECKART did several years of research and development work be

fore the product reached market maturity – or, as Dr. Klaus

Greiwe, Product Manager Added Value at ECKART, says: “Turned

around molecules.” This was possible because the ALTANA

Group had allocated the resources needed for many years of re

search and development.

“The framework conditions are right at ALTANA,” says

Dr. Klaus Greiwe. In addition, there is entrepreneurial thinking,

which includes stamina. Says Wolfgang Herzing: “Despite

the considerable efforts we had to make at the beginning, we

didn’t throw in the towel. With our determination, inven

tiveness, and persistence we created METALURE® Liquid Black

and thus provided our stakeholders with the necessary added

value.”

Testing, testing, testing – this includes checking the chemical resistance (photo bottom left). This is one of the many work steps in product develop-ment. Wolfgang Herzing (photo on the right), the group manager at the technology center, and the R&D and product management team exam-ine the metallic effect of the test objects.


FROM TALENT

In keeping with the objectives of our Keep

Changing Agenda, by 2020 around

70 percent of all of our management posi

tions are to be occupied internally. Also,

we aim to further strengthen the interna

tionalization of our management. To

achieve these targets, we have developed

a systematic talent management con

cept. At the center of the concept are our

employees. They are developed opti

mally and expediently based on their abil

ities and interests. ALTANA’s integrated

human resource development programs

are geared to this purpose. They offer

employees further training possibilities and

the opportunity to enhance their per

sonal development.

The ALTANA Group’s employees are its

most important resource. In order to

ensure the lasting success of our com-

pany, we promote their profession-

al development and prepare them for

leadership positions. A special fo-

cus is on young talent, specialists, and

managers.

TO LEADERSHIP

“STRENGTHENING GLOBAL THINKING”Motivated and qualified employees are the basis of ALTANA’s sustainable growth. The company’s pioneering talent management for young staff and managers generates the required added value for our stakeholders with specific human resource development programs.

Project work with colleagues across three continents and three

time zones? Project meetings at midnight? “That was a remark

able experience,” says Ka Lai (Mandy) Lam. “But a positive

one,” she adds. The head of Finance, Controlling & Supply Chain

Management at ECKART Asia in Hong Kong participated in

ALTANA’s Management Development Program (MDP) and is im

pressed by its structure and content. “The intensive program

helped me to improve my knowledge and my abilities, to learn

new things, and also to find out a lot about myself,” says

Mandy Lam. During the program, she visited sites of ALTANA’s

four divisions across the globe. “The personal contact at the

sites opened my eyes to the possibilities that exist.” She is fasci

nated by the opportunity to cooperate with people from differ

ent cultures.

Practice and theory – MDP participants experi-ence production close up, for example at the ECKART and ELANTAS plants in Zhuhai, China. They work together on projects right on site.


Boosting Competitiveness

In order to work efficiently and successfully in a global company,

it is extremely important to establish a worldwide network of

good contacts and to gain an understanding of special cultural,

professional, and countryspecific features. And this is one of

the main goals of ALTANA’s talent management concept. The MDP

is one of the measures geared to young managers who are

particularly willing to change. They are prepared for global lead

ership roles – individually and at the same time specifically for

their future tasks.

“To this end, we have to strengthen their global perspective

and global thinking and to harness our promotion activities in

an integrated yet needoriented way,” explains Anne Gradl, the

head of Leadership & Talent Management at ALTANA. Fostering

global thinking and working is a special focus of the MDP. Partici

pants complete six modules in a period of 18 months. Annette

Lampe, the head of personnel development at ALTANA, explains:

“We at ALTANA have to convince young talent of the merits

of our company to ensure that we remain competitive in the long

run in a globalized world.” The talent management approach

therefore encompasses a wide range of specific programs for both

future and existing managers.

Leaving One’s Comfort Zone and Going the Extra Mile

The need for managers is high. ALTANA set itself the goal of oc

cupying some 70 percent of its leadership positions internally

by 2020. “Suitable candidates for the MDP are personalities with

great flexibility, openness, a performance orientation, and a

willingness to leave their comfort zone and go the extra mile,”

stresses Annette Lampe.

The employees also have to want and be able to push for

ward changes as entrepreneurs. For the human resource de

velopment programs are an important investment in ALTANA’s

leadership culture. “They form the basis of our corporate suc

cess. And they enable us to achieve the necessary added value

for our stakeholders,” says Annette Lampe with conviction.

“STRENGTHENING GLOBAL THINKING”

Hong Kong – MDP participant Mandy Lam talks with her management colleagues at ECKART Asia at the Hong Kong site. She successfully imple-ments the knowledge she gained in the MDP in practice.


FROM INVESTMENT

ALTANA offers its customers around the

world excellent specialty chemical solu

tions, which make products used in daily

life better and more sustainable. As they

have innovative product characteristics, are

environmentally friendly, and are safe,

they assure our customers the necessary

competitive edge. This is made possible

by the ALTANA Group’s production and re

search and development at our 47 man

ufacturing sites and 60 service and research

laboratory sites across the globe.

Thanks to our sustainable growth

strategy, we at ALTANA create the nec-

essary added value for our stake-

holders, our employees, and our cus-

tomers. We achieve this through

our outstanding products and process-

es in manufacturing as well as re-

search and development.

TO EXCELLENCE

“CHANGE TO LEAD”ACTEGA DS has special solutions for closures and packaging that customers want. As a result, the ALTANA Group creates added value for its stakeholders. Its innovative strength enables high and sustainable growth for ACTEGA DS. In order to become even more innovative, sustainable, and efficient, the company is consistently investing in the expansion of the site.

“Even for me as an experienced production manager, it is extreme

ly fascinating to test new processes during production,” says

Laurent Bled. This challenge appeals to the production manager

at ACTEGA DS in Bremen and motivates him to be fully com

mitted to the company’s current large project. The specialist for

innovative closure and packaging technologies is investing 20

million euros to expand the site. By 2021, the area for production,

research and development (R&D), and storage is to be extended

by 8,000 square meters. This will create enough space to double

production capacities and triple R&D capacities.

The around 150 employees of ACTEGA DS have ambitious

plans. The ALTANA Group’s closure and packaging specialist

not only intends to defend its position as a globally leading sup

plier of innovative, sustainable technologies for sophisticated

Prepared for higher growth – with double the amount of product capacities and triple the amount of R&D capacities. This also includes a filling facility (photo on the left), a tensile tester for R&D (photo in the middle), and crown cork inspection.


and applicationoriented solutions, but to extend it. ACTEGA DS

is going on the offensive. Apart from the food and beverage

industry, it is focusing increasingly on the medical technology and

consumer goods sectors. ACTEGA DS wants to grow by up to

10 percent a year in future markets.

Operational Excellence

“Our claim ‘Change to Lead’ sums it up,” says Wilfried Lassek,

the managing director of ACTEGA DS. ”Our project is not only a

site expansion. We are investing in technological progress in

order to improve our competitive position.” Optimization of the

production processes is a key contributor to the necessary ex

cellence. The use of resourcesaving technologies is another. As a

consequence, the energy efficiency of the new buildings will

be improved decisively.

Due to the consistent implementation of ALTANA’s sustain

ability thinking, moreover, employees will no longer have to

engage in difficult physical work such as rawmaterial preparation

in the course of process optimization. Due to investments in

additional automation measures in conveyor technology, such

physically burdensome work will largely disappear. In parallel,

new jobs are created, which makes ACTEGA DS more attractive

for specialists.

Digitalization for Greater Customer Satisfaction

ACTEGA DS is not only improving its production conditions,

but also its innovative strength. Due to the expansion of applied

R&D, the site will become an innovation center for closure

and packaging solutions. In the process, ACTEGA DS will con

sistently use digitalization to develop new solutions for our

customers. “We are creating structures that will enable us to

develop individualized solutions with our customers right

here,” says Wilfried Lassek with conviction. For him one thing

is clear: “Digitalization, used properly, will help us achieve

the required versatility and flexibility in the face of rapidly chang

ing markets.”

“CHANGE TO LEAD”

The foundation is laid – for the 8,000-square- meter expansion of ACTEGA DS in Bremen. The ALTANA Group is investing around 20 million euros to expand the site. Managing director Wilfried Lassek and his project team have a look at the progress that has been made at the construction site.


FROM OFFERING SOLUTIONS

Our expertise in chemistry, formulation,

and application enables us to develop in

novative and environmentally compat

ible solutions that conserve resources and

protect the climate. In addition, we

help our customers manufacture with low

emissions and energy efficiently and

heighten the security of their products.

With its innovative and ecologically

sound products, the ALTANA Group is one

of the most important suppliers on the

markets of today and tomorrow. An ex

ample is ELANTAS. With its insulation

technology solutions, this ALTANA Group

division is among the world’s leading

suppliers for the growing emobility mar

ket.

The ALTANA Group aims to grow

profitably in the long term. We there-

fore not only gear our entrepre-

neurial decisions to economic and so-

cial necessities, but also consider

ecological aspects. This triad of econ-

omy, ecology, and corporate social

responsibility reflects our understand-

ing of sustainability.

TO CLEAN AIR

“PICKING UP SPEED SUSTAINABLY”ELANTAS has more than 100 years of experience and is already one of the leading suppliers of insulation technology in the young e-mobility market. The company’s high-performance solutions for motors and power electronics in electric cars offer the necessary added value.

Creating added value through innovative 360degree solutions

with this core competence ELANTAS has become one of the

world’s leading insulating materials specialists for the electrical

and electronics industry. Its innovative insulating technologies

have long been standard in sustainable energy solutions such as

wind energy, which began its triumphant advance in the early

1990s. “Now with emobility we are experiencing the next revo

lution,” says Dr. Christian Przybyla, Chief Technology Officer

(CTO) of ELANTAS. “It’s incredibly fascinating to be part of the

transition, which has only just begun and which will have lasting

significance.”

High Solution Competence

ELANTAS can contribute to electromobility with four applications.

In addition to temperature and coronaresistant materials for in

sulating copper wires for motor constructions, and impregnating

resins to strengthen the entire engine, its coating and casting

materials can be used to protect electronic components of elec tric

E-mobility is the next revolution – and ELANTAS is at the very forefront. The e-mobility team in Hamburg at a meeting and platinum coating testing in the lab.


vehicles and charging stations. “The fact that emobility is making

headway in everyday life enables us to enter a large future

market with our products. So we can continue to pick up speed –

and especially with sustainable solutions,” says Dr. Christian

Przybyla. There are currently around 1.5 million electrified vehicles

sold worldwide annually, and by 2025 there are expected to be

new sales of about 25 million hybrid and electric cars per annum.

Development work on highperformance electric engines

is in full steam – and the specialist for insulating materials in the

ALTANA Group is cooperating closely with original equipment

manufacturers (OEMs). “We are in demand as a solution provider,”

says the Chief Technology Officer proudly.

In Close Proximity to Our Customers Worldwide

In addition, ELANTAS’ solutions meet the high sustainability stan

dards of emobility: The use of nonhazardous materials, the

reduction of solvents, and the development of waterbased technol

ogies are the top priorities. “This is possible thanks to our well

positioned research and development,” says Dr. Christian Przybyla.

ELANTAS has operational research and development depart

ments at twelve sites globally for solutiondriven, customer

oriented tasks, as well as four departments for longterm, strate

gic research. A total of more than 150 employees are working

in the field of innovation. Thanks to cooperation between the

global teams and the resulting optimal use of knowhow and

technology, customers are offered further, important added

value.

Its success speaks for itself. ELANTAS’ insulation solutions

are already an integral part of electric engines of the world’s

leading manufacturers. By 2025, a market volume of 100,000

tons of different insulating materials is expected for motors,

power electronics, batteries, and charging infrastructure in the

field of electromobility. Outstanding performance features –

besides the high sustainability standards – include the lifetime

under strong thermal and electric stress as well as the efficiency

in order to reduce the weight of the drive train. Says Dr. Christian

Przybyla: “We know the expectations of our customers and are

focusing our development activities accordingly.”

The core of the electric motor – without the stator it won’t work. ELANTAS’ Chief Technology Officer (CTO) Dr. Christian Przybyla (photo on the right) talks with colleagues from the global steering committee about product development in the field of e-mobility.


FROM CURIOSITY

People are at the center of ALTANA’s

activities, both within the company and in

our operating environment. We there

fore support selected projects carried out

by experienced partners from the field

of education. The focus is on projects that

promote people’s understanding of the

natural sciences, mathematics, informatics,

and technology. As a network partner

of the House of Junior Researchers foun

dation, ALTANA has for many years ac

companied two elementary schools and

one daycare center in Wesel in order

to encourage children and youth to learn

about science. ALTANA also supports an

“educational coaching” project that individ

ually promotes elementary school chil

dren from socially deprived backgrounds.

ALTANA practices good corporate

citizenship by promoting many small

and large social projects relating to

education, science, and research. We

show that we are a good neighbor

by supporting initiatives near our

sites in Germany and abroad.

TO CONFIDENCE

“LEON IS NOW ON THE BALL”The mentors of the “educational coaching” project assisted 18 children at GGS Innenstadt elementary school in Wesel and the Klausenhof Academy in 2018. They are convinced that “all children have potential.” ALTANA has sup-ported the educational project, which aims to give children more equal opportunity, for more than four years.

The time had come. After six months of listening, accompaniment,

and cautious approaches Leon* finally let the mentor touch

his hand. “It was a great moment for both of us,” says Marianne

Podszun. Because now it was clear that the necessary trust had

been built. This takes a long time and requires a great deal of care

and attention. Marianne Podszun is one of 18 volunteer men

tors who are taking part in the “educational coaching” project at

GGS Innenstadt elementary school in Wesel. The mentors are

currently supporting the development of 18 children, starting in

second grade, through socalled educational coaching. The chil

dren, who come from socially deprived backgrounds, are pro

moted and challenged in keeping with their interests and abilities.

Mentors Encourage and Challenge the Children

Elevenyearold Leon is one of them. Shy and looking down, he

stood in front of Marianne Podszun for the first time three

* The name is changed.

Mentors from the educational coaching project at GGS Innenstadt elementary school in Wesel talking about the children‘s development and during afternoon activities with them. Play is also important. Here a game of foosball.


years ago. Playing with cloth and hand puppets, she learned about

what he likes. Leon likes to go for walks. And since his mentor

taught him how to ride a bike, he loves that too. They cycled to

gether along the Rhine. She’ll never forget when Leon asked

her with big eyes whether it was really the Rhine.

You Can’t Build Trust Without Empathy

Leon was not the only one who was alone with his neediness. His

parents were too. His father lent a helping hand, seeing an

opportunity for his son. He said that Leon liked to play the drums.

His mentor subsequently organized a visit to a music school –

and the boy learned that it’s worth sticking with something, not

giving up if something doesn’t work out immediately. “You

have to have discipline if you want to achieve something. Leon is

now on the ball,” says the mentor proudly. He not only started

learning kickboxing, but also does his homework alone now after

initially receiving help.

Not only the children but also the mentors have to be on the

ball. “Going on an outing sounds easy. But you need a lot of

patience, experience, and empathy. That’s very important,” says

Hildegard Derksen, a socioeducational expert and project coor

dinator at the Klausenhof Academy. If the mentors didn’t have the

ability to listen, to understand the children’s gestures and facial

expressions and behavior, and to empathize with the kids, they

wouldn’t be able to build a relationship with them. It is a

responsible task, especially since the volunteer mentors are not

therapists or family helpers, but usually retirees who practiced

all kinds of professions.

You feel the volunteer work is worthwhile when you see the

children seeking out intimacy and role models, says mentor

Monika Ebling. “At the end of the day, you don’t leave the re

sults with the children at the school. And the encouraging

and nice moments of support for the children motivate you again

and again,” she adds. The mentors not only receive training,

qualifications, and further training, but also meet regularly to dis

cuss their experiences and to get advice from Hildegard Derksen

and the other mentors. Says Monika Ebling: “We get help just

like the children do.”

Play and fun – a mentor assisting a child as she reads in the school library and on the way to extracurricular activities outside of school, includ-ing playing music, riding a bike, and swimming. The motto of project manager Hildegard Derksen (photo at the bottom right) is: “All children have potential.”


47

53

66

70

71

Group Basics



Subsequent Events



For ALTANA, 2018 had different dynamics in the course of the year. While the first half of the year was characterized by ongoing dynamic growth, the demand situation in the second half of the year was increasingly subdued. In addition, accelerated rawmaterials prices led to a significantly higher materials cost ratio in the course of the year and thus to a decline in earnings. Nevertheless, we reached our growth targets overall in the 2018 fiscal year and the profitability was within our strategic target range. At the same time, we invested unabatedly in further sustainable profitable growth and pushed forward our strategic growth initiatives.

Group Basics

Organization and Legal Structure

The ALTANA Group is a global supplier of specialized chemical

products and related services for different branches of

industry and application fields. In the 2018 fiscal year, the

Group’s 63 consolidated subsidiaries and associated com

panies achieved sales of approximately € 2.3 billion. The

ALTANA Group employs about 6,400 people.

ALTANA’s activities are grouped into four divisions, each

of which has its own management and organizational

structure. The divisions and the Group companies assigned

to them are decentralized and empowered to largely make

market, location, and productrelated decisions themselves.

The divisions are active worldwide and have their own

production sites and sales offices as well as research and de

velopment laboratories in the regional markets that are

important for them.

ALTANA AG, headquartered in Wesel, is a stock corpo

ration in accordance with German law. As the ALTANA

Group’s managing company, it assumes strategic control of

the Group and the divisions. ALTANA AG is led by the Man

agement Board, whose members act on their own responsi

bility and are solely committed to the interests of the com

pany. The Management Board’s activities are monitored by

the Supervisory Board, whose members also advise

the Management Board. More information on ALTANA AG’s

management and control system is provided in the Cor

porate Governance section of this report.

All of the shares in ALTANA AG are held by SKion

GmbH, Bad Homburg v. d. H., Germany, an investment com

pany owned by Susanne Klatten.

The decentralized organizational structure combines the

individual operating units’ ability to act swiftly and cater

to the needs of markets and customers with the advantages

of a financially strong and internationally active group. The

organization is designed to adapt flexibly to changed market

conditions and a volatile economic environment. In addi

tion, new activities can be integrated into the organization

in a short time.

Business Activity and Divisions

As a globally active specialty chemicals group, ALTANA

focuses its core activities on sophisticated markets and cus

tomers who need individual solutions.

A significant share of the ALTANA Group’s product and

service portfolio encompasses input materials for the pro

duction of coatings, printing inks, and plastics. In addition,

ALTANA manufactures printing inks and coatings for spe

cial applications, insulating resins for the electrical and elec

tronics industries, sealants for packaging, and measuring

and testing instruments.

Activities of the Divisions

BYK

The BYK division is one of the leading international suppliers

of specialpurpose ingredients, socalled additives, used

in coatings and paints, plastics, gas and oil exploration, and

other industrial applications. The division’s products, most

of which are used in only very small amounts, have a decisive

influence on the properties of their customers’ end prod

ucts or enable customers to improve their manufacturing and

industrial processes.

Wetting and dispersing additives, one of the division’s

main product groups, help improve the distribution of

pigments and filling materials, and enable them to function

better, for example in coatings and plastics. With the help

of defoamers and airrelease additives, foaming is prevented

during the manufacture of coatings and paints as well as

in end customers’ applications. Surface additives are used to

produce special properties such as shiny, matte or espe

cially smooth surfaces. Rheology additives improve, for exam

47Group Management Report Products Safety and Health Environment Human Resources Social Commitment Consolidated Financial Statements

ple, the flow behavior of coatings and plastics. The divi

sion also manufactures measuring and testing instruments

that are used to determine surface properties, color shades,

and optical effects.

BYKChemie GmbH, based in Wesel, is the manage

ment company of the division. In addition, it is the division’s

biggest production and development site for additives and

the ALTANA Group company with the highest sales. BYK also

produces at other sites in Germany, the Netherlands, Great

Britain, as well as in China and the U.S. All of the measuring

and testing instruments are manufactured at a site in

southern Germany (Geretsried).

The division sells its products under the brands BYK

(additives) and BYKGardner (instruments), primarily to cus

tomers in the coatings, printing inks, and plastics industries.

Due to its comprehensive portfolio, BYK is a system supplier

and partner of coatings manufacturers and plastics proces

sors in particular. On the basis of its great problemsolving

expertise, BYK has also attained an important market posi

tion in many other industrial application fields in recent years.

The division markets its products in the important

regions via its own companies and branches. In addition, a

dense network of dealers and agents markets its products

worldwide. BYK generates the highest share of its sales in

Europe, followed by Asia and the Americas. In terms of

countries, the U.S. makes the largest contribution to sales,

followed by China and Germany.

BYK continually expands and supplements its product

portfolio. To gear its innovation activities closely to the

needs of the markets, the division has its own network of

development laboratories, which cooperate closely with

customers in the respective regions. At the same time, new

fields of application are continually tapped for existing or

new products.

Business divisions and product portfolio

Paint additives Coatings Wire enamels Closures

Plastics additives Graphic arts Electrical Flexible packaging

Industrial applications Cosmetics and personal care Electronic Labels

Exploration technology oil / gas Plastics industry Engineering materials Paperbased packaging

Measuring and testing instruments Functional applications Publication and commercial

Rigid packaging

Specialty consumer goods

48 Group Basics

ECKART

ALTANA concentrates the development, production, and sale

of effect pigments in the ECKART division. Customers use

these products to achieve visual and functional effects, pri

marily in coatings, plastics, printing inks, cosmetics, and

construction materials. The principal raw materials are alumi

num, copper, and zinc. Aside from metallic effect pigments,

other pigments are offered based on artificial substrates. The

division’s portfolio is supplemented by effect printing inks

and services.

Aluminumbased effect pigments comprise the largest

part of ECKART’s business. Customers use them particularly

to achieve silver metallic effects, for example, for car paints

or on graphic arts products. Aluminum pigments are also

used for functional purposes, for example, in the manufac

ture of aerated concrete. Bronze effect pigments generate

golden effects in paints, printing inks, and plastic products.

Customers use zinc pigments in special paints to achieve

functional properties, particularly for corrosion protection.

ECKART GmbH is the division’s operating manage

ment company. It produces a large part of the effect pig

ments it sells worldwide in southern Germany (Hartenstein

and Wackersdorf). Other manufacturing sites are located in

Switzerland and Finland, as well as in China and the U.S.

The manufacturing process is characterized by a very

high degree of value creation. In a number of successive

steps, all kinds of pigments are made, refined chemically, and

in some cases processed into pressready printing inks.

The effect pigments are marketed predominantly

via the division’s own sales structures, but also by sales

partners. ECKART’s most important customers include

inter national manufacturers of coatings, printing inks, and

plastics.

Other important customers are manufacturers in the

construction industry and the cosmetics sector. ECKART

achieves nearly half of its sales in Europe. Its next largest

sales regions are Asia and the Americas.

As an important manufacturer of metal effect pigments,

ECKART continually pushes forward the development of new

product qualities and opens up new fields of application on

the basis of sophisticated technological expertise and many

years of knowhow.

ELANTAS

The companies in the ELANTAS division offer their customers

a high level of expertise in the field of electrical insulation

materials. As one of the world’s leading suppliers of such

products, the division’s portfolio concentrates on coatings

for insulating magnet wires as well as special resins and coat

ings for impregnating and protecting electrical and elec

tronic components.

ELANTAS has its own holding structure under the man

agement of ELANTAS GmbH, based in Wesel. The latter

controls the division’s activities and supports its operating

subsidiaries, which develop and produce insulating mate

rials in Germany, Italy, China, India, Malaysia, the U.S., and

Brazil.

The division’s products are marketed worldwide. Among

its most important customer groups are magnet wire man

ufacturers, which need materials to insulate wires made of

copper or aluminum. The division also supplies insulating

resins and coatings directly to manufacturers of electrical and

electronic components.

ELANTAS’ most important sales region by far is Asia,

and particularly China. A high proportion of global manufac

ture of electrical and electronic components and consumer

goods is concentrated in this region. The division has had its

own production sites in China, India, and Malaysia for

years. After China, its most important sales markets are the

U.S., India, and Italy.

On the basis of comprehensive expertise in the manu

facture and application of liquid insulating systems, the

division is steadily expanding its activities. It seeks to tap new

application fields and thus growth potential by developing


new insulating materials and applying specific polymerization

knowhow.

ACTEGA

The ACTEGA division’s portfolio is tailored to the needs of

the packaging and graphicarts industries. It produces

specialty coatings, printing inks, adhesives, and sealants used

by customers to achieve functional and visual effects.

ACTEGA is managed by the holding company ACTEGA

GmbH, based in Wesel. Subsidiaries in Germany, France,

Spain, China, the U.S., Brazil, Canada, and Chile manufacture

and sell the division’s products. Its research and develop

ment activities are also decentralized, oriented to the com

petencies of the individual companies in the relevant appli

cation areas.

Important product groups of the division include water

based coatings and printing inks, as well as sealants and

adhesives used to make packaging materials. A focal point

of its product portfolio is the specific needs of the food

industry with its high quality requirements. In addition, there

is a demand for ACTEGA’s printing inks and overprint

varnishes among customers in the graphic arts industry. The

division’s largest sales region is Europe, followed by the

Americas. Its most important individual markets are the U.S.

and Germany.

Together with the packaging industry, and in direct con

tact with brand manufacturers, ACTEGA develops new

and improved optic and haptic functionalities. Its innovation

activities primarily aim to improve the safety and shelf life

of packaged foods.

In recent years, the division has invested in a targeted

way in the acquisition and further development of new

technologies in order to tap new growth potential in the me

dium to long term for its existing business and to prepare

its entry into new markets.

Important Influences on Business Development

ALTANA’s different sales markets are influenced by various

short, medium, and longterm trends.

Short and mediumterm fluctuations in demand result

mainly from economic developments. The current devel

opment of consumer behavior is not the only factor. Our cus

tomers’ expectations regarding the shortterm develop

ment of the end markets downstream in the value chain also

have a significant impact on their purchase behavior. This

appraisal largely determines how much storage is reserved

along the value chain.

In addition, actual and expected changes in the prices

of essential raw materials impact the sales situation. When

rawmaterials prices continually rise, customers look for

alternative input materials and this influences overall sales or

the product mix. The same applies to significant changes

in other cost components that have a strong influence on

the price of products. This price sensitivity of the markets

is also reflected in shortterm changes in demand, when for

example stronger price fluctuations are expected for sig

nificant rawmaterials markets.

The competitive situation in the different productspe

cific market segments can have similar effects on customer

behavior. The entry of new manufacturers into a market or

the withdrawal of existing manufacturers from a market

and the competitors’ prices can impact demand.

Longterm changes in demand for the Group’s products

and services are brought about on the one hand by global

megatrends and the economic growth of certain regions. On

the other hand, product and technological developments

continually open up new sales potential or lead to product

segments being discontinued.

In the course of a year, seasonal fluctuations in demand

result from lower customer activity during the summer

months and at the end of the year.

50 Group Basics

Strategy and Control System

Strategy

Current market requirements, and market demands expected

for the future, determine the ALTANA Group’s corporate

action. The success of our customers is at the center of our

business activities. We can only be successful in the com

petitive environment in the long run if we offer our custom

ers added value.

Our top financial priority is to sustainably increase

the company’s value. To achieve this aim, we consistently gear

ALTANA to profitable growth in futureoriented specialty

chemicals markets.

At ALTANA, profitable growth is based on several pillars.

The primary ones are to expand our operating activities

in existing markets and to open up new adjacent sales seg

ments. ALTANA’s four divisions occupy significant competi

tive positions in their respective sales markets. This position

ing is an important prerequisite for our being identified

and acknowledged by market participants as a competent

supplier of customized solutions. In addition to ALTANA’s

comprehensive product portfolio, innovation plays a key role

in its high level of problemsolving expertise.

To enable customers to create new applications and

strengthen their portfolio, ALTANA continually pushes

forward its own research and development activities. To this

end, our employees’ knowhow and experience are just

as important as investments in new technologies.

To continually expand our specialized portfolio, we

regularly supplement our operating growth by acquiring new

companies or business activities. As a result, for example,

new value creation steps are integrated into the Group or

access to new markets and technologies is granted.

In recent decades, the ALTANA Group has increasingly

geared its activities to international markets. As a conse

quence, the Group has been able to benefit from the strong

growth rates of emerging countries and to accompany

many customers as they build production structures in these

regions. Furthermore, ALTANA’s global orientation enables

it to recognize local demand trends quickly and to examine

whether the applications developed subsequently have

sales potential in other regions too.

Control System and Goals

ALTANA’s control system is fundamentally oriented to the goal

of a sustainable increase in the company’s value. A number

of ratios, mainly financial, are derived whose developments

are analyzed and for which target values are determined.

The most important key performance indicators are ALTANA

Value Added (AVA), sales growth, earnings before interest,

taxes, depreciation and amortization (EBITDA), as well as the

EBITDA margin, earnings before interest and taxes (EBIT),

and capital expenditure.

A change in the company’s value in a given period is

calculated by using the financial ratio ALTANA Value Added.

The absolute AVA is calculated by subtracting the cost of

capital employed in the Group from the operating earnings.

The relative AVA constitutes this difference in proportion

to the capital employed. It is calculated by subtracting the

cost of capital from the return on capital employed (ROCE).

The calculation of the operating earnings starts with

earnings before interest and taxes, which are adjusted for

acquisitionrelated and onetime special effects and from

which a calculated tax burden is deducted.

The capital employed, in turn, encompasses those com

ponents of the assets and liabilities needed to achieve

operating earnings. The cost of capital is determined from

the weighted average of cost of debt and cost of equity.

We regularly examine the weighted average cost of capital

but only adjust it for the calculation of the AVA if it exceeds

or falls below a certain range. In the last few years, we set

our weighted average cost of capital at 8 %.

AVA and ROCE are used for measuring the company’s

success and for determining variable compensation compo


nents. In addition, they are used as criteria for making

strategic and operative decisions at the Group holding, divi

sional, and individual company levels.

Our goal is to achieve a sustainable positive AVA, that is,

to achieve operating earnings that exceed the cost of

capital. In each of the last few years, we have managed to

generate a positive AVA.

Sustainable profitable sales growth forms the basis for

a longterm increase in our operating earnings and thus

in the value of the company. ALTANA’s goal is to outperform

the general market growth in the most important sales

segments and thus to obtain market shares.

In the long term, we aim to achieve average annual

operating sales growth of 5 %. We seek to generate addi

tional growth through acquisitions, either by acquiring

supplementary activities at the level of our existing divisions

or through the possible integration of new business activi

ties.

But growth should not be achieved at the expense of

profitability. Therefore, control of the EBITDA margin is very

important for the ALTANA Group. The longterm target

range for the EBITDA margin of the Group is 18 % to 20 %.

Derived from this are longterm target margins for our four

divisions, which may deviate from the average target value

for the Group due to the different business activities and

market characteristics. In the last few years, the Group mar

gins achieved were within or, in some years, even above

the target range.

In addition to achieving longterm sales and earnings

momentum, another focus to successfully increase the value

of the company is control of the operating capital. The

main factors of influence in this context are the development

of fixed assets and of net working capital.

On average over several years, our investments in prop

erty, plant and equipment and intangible assets have been

approximately 6 % of our sales. Due to this continu ity, sharp

increases in operating capital and resulting shortterm

fluctuations of the AVA can be minimized. In addition, every

important investment is examined regarding its short and

longterm effects on the company’s value.

For the control of net working capital, which is of great

importance for the development of operating capital, we

use key performance indicators to analyze and control prof

itable growth and the company’s value. These key perfor

mance indicators concern the scope of inventories as well as

trade accounts receivable and payable.

Apart from the aforementioned essential financial

control parameters, there are other financial key indicators

that help us analyze and control profitable growth and

the company’s value. The most important ones are cost fig

ures (cost of materials, personnel expenses, etc.).

To guarantee that all activities are geared uniformly to

the Group’s strategy, we also use nonfinancial key perfor

mance indicators. These indicators, however, are not directly

relevant for control and focus on a qualitative evaluation

of activities whose financial measurability is limited. They

include data for evaluating innovation and sustainability,

analyzing sales markets, and gauging customer satisfaction.

Integrated Planning Processes

All of the key performance indicators relevant for control are

compiled and analyzed within the framework of standard

ized reporting processes. To be able to use these key param

eters effectively to control our strategy and possible short

and mediumterm measures, there is an integrated planning

process embracing different planning levels and dimensions.

The planning cycle has a strategic planning compo

nent, which combines the analysis of the essential perfor

mance indicators for future business development at

the productgroup level with a detailed representation of the

changes expected in the market environment.

From this, strategic measures are derived enabling us

to react to expected developments at an early stage. These

measures, developed in the strategicplanning process,

52 Group Basics I Business Development

include not only fields of activity on current sales markets, but

also concrete goals and planning steps for entry into

new fields of business or application areas and changes in

the portfolio of business activities.

The decisions taken within the framework of strategic

planning enter into our subsequent mediumterm financial

planning. The latter delineates our growth and profitabil

ity goals for the coming three years and the effects of the

expected business development on ALTANA’s asset and

financing structure. This is used to derive possible measures

for our financing strategy. Our mediumterm financial

planning is supplemented by scenario analyses, which trans

parently reflect the sensitivities of the key performance

indicators to relevant, predominantly cyclical changes in the

market environment. From this, we derive levels of reaction

for possible countermeasures.


General Business Setting

Overall Economic Situation

In 2018, the global economy developed with a momentum

comparable to that of the previous year. The International

Monetary Fund (IMF) estimates that the world economy grew

by 3.7 % last year (previous year: 3.8 %). But the global

economic conditions steadily deteriorated in the course of the

year. This trend was particularly evident in the established

industrial nations. Both in the Eurozone and in Japan the eco

nomic performance was weaker than in the previous year.

This burden was offset solely by the dynamic development

of the U.S. economy. The emerging countries grew more

strongly than the established economic nations again in 2018.

The key economic indicators in the sales regions important

for ALTANA’s business developed at different levels in 2018.

With expected growth of 1.8 %, the Eurozone posted

significantly lower growth than in 2017 (2.4 %). All of the

important European economies underwent a similar eco

nomic development. According to the IMF, Germany’s eco

nomic growth was particularly subdued. At 1.5 %, it was

well below the good previous year (2.5 %). But the overall

downturn in growth in Europe was also driven by other im

portant economies in the Eurozone such as France and Italy.

According to current IMF estimates, the economic

dynamic in the countries of the Americas was generally at a

stable level. Only the U.S. economy grew, from 2.2 %

in the previous year to 2.9 % in 2018. This development is

based on a palpable improvement of private consumption

and on companies’ growing inclination to invest. Economic

growth in the important Latin American economies was

at the same low level as the previous year. The Brazilian econ

omy remained stable, 1.3 % up on the previous year. The

same applies to Mexico and the entire Latin American eco

nomic region.

Growth in Asia was also stable. The growth rate of the

large emerging economic nation China fell from 6.9 % in the


dollars to 85 U.S. dollars. Hence the increasing price trend

that began in mid2017 basically continued. But this devel

opment was not uniform. There was high volatility and

repeated phases in which the price moved laterally or fell

slightly. In the months to follow, from October to Decem

ber, however, the price decreased strongly, closing the year

at around 55 U.S. dollars. Nevertheless, the average price

in 2018 was significantly higher than in the previous year.

Important Events for Business Development

In 2018, nonoperating effects influenced ALTANA’s earn

ings and financial situation as well as its assets.

Acquisitions in 2017 of U.S. and German PolyAd com

panies (BYK division), of Solvay’s insulating resin business,

and a further acquisition of wire enamel activities in China

(both by the ELANTAS division) again had positive effects

on sales and earnings in 2018, because these activities were

included in the financial statements for a full fiscal year for

the first time. In addition, the successful acquisition of novel

technologies in 2017, which are to be developed to the

stage of market readiness in the coming years, also influ

enced the Group’s key performance indicators in 2018.

Of primary importance in this context is the acquisition of

metallography technology from the Israeli company Landa

Labs.

In 2018, the development of exchange rates between

the euro, the Group currency, and other currencies impor

tant for ALTANA had a negative effect on sales and earnings

development. The average exchange rate of 1.18 U.S.

dollars for one euro was higher than in the previous year

(1.13 U.S. dollar for a euro). Effects from changed ex

changerate relations also resulted from a further increase in

the average exchange rate between the euro and the

Chinese renminbi from 7.63 renminbi to 7.81 renminbi for

one euro. Other currencies important for key business

figures also changed in relation to the Group currency, the

euro. The effects from the translation of financial state

pre vious year to 6.6 % in 2018. Growth in India, however,

rose, from 6.7 % in 2017 to 7.3 % last year. Together with the

countries of the ASEAN5 economic region, these nations

continue to constitute the basis of the development in the

entire Asian economic area. But growth in Japan slowed,

decreasing from 1.9 % to 0.9 %.

Industry-Specific Framework Conditions

According to estimates by the American Chemistry Council

(ACC), global chemical manufacture increased by 2.8 %

in the past fiscal year, achieving lower growth than in the

previous year (2017: 3.2 %).

In 2018, the production volume in Germany, Europe’s

largest chemical manufacturer, decreased (excluding the

pharmaceutical industry) by 1.5 % according to estimates by

the German Chemical Industry Association, although pro

ducer prices increased. According to the ACC, other European

countries that are important for the chemical industry also

exhibited a clear slowdown in chemical production growth,

including France and Italy.

In the U.S., chemical production increased to 3.1 % (pre

vious year: 2.6 %) against the backdrop of improved

macroeconomic conditions. In Latin America, chemical man

ufacture showed a constant development visàvis the

previous year after a few recessive years.

The chemical sector in the AsiaPacific region was again

the biggest driver of global growth. The ACC estimates that

chemical production in the region grew in 2018 by 3.2 %,

which, however, lagged behind the strong growth in the

previous year (3.9 %). The loss of momentum is primarily

due to the development of chemical production in China,

whose growth decreased from 4.2 % in the previous year to

only 2.5 % in 2018. By contrast, chemical manufacture

increased in Korea and India, with growth of 5.2 % and

6.5 %, respectively.

From the beginning of the year to the end of the third

quarter, the price of a barrel of crude oil rose from 66 U.S.

54 Business Development

ments of important noneuro Group companies on items of

the income statement were generally negative in 2018.

However, differences in exchange rates on the balancesheet

date had a positive influence on the balancesheet posi

tions compared to the previous year.

Business Performance

Group Sales Performance

Group sales amounted to € 2,307.4 million in 2018, a 3 %

or € 60.4 million increase over the previous year (€ 2,247.0

million). Nonoperating effects generally had a positive

influence on the sales development. The acquisition of the

PolyAd companies (BYK division) in 2017 and the new

activities in the ELANTAS division acquired in the U.S. and

China resulted in a sales increase of 1 % over the previous

year due to the fact that they were included in the consoli

dated financial statements for a full calendar year for the

first time. But the positive acquisition effects were more than

offset by burdens from exchangerate changes. Sales

drops resulted primarily from the changed relations of the

euro to the U.S. dollar, to the Chinese renminbi, and to

the Brazilian real, amounting to 2 % in total. Adjusted for

these nonoperating effects, operating sales grew by 4 %

in a yeartoyear comparison. As a result, we achieved sales

growth within the 2 % to 5 % range we had anticipated

for 2018 at the beginning of the year.

The operating growth was driven almost exclusively

by higher sales prices and slightly positive productmix effects.

The sales volume did not change much compared to 2017,

however. But these influences generally developed unevenly

within the Group.

The regional volume and sales structure shifted only

slightly visàvis 2017. Accounting for 38 % of total Group

sales, as in the previous year, Europe continued to be

ALTANA’s most important sales market. Both nominal sales

(+ 3 %) and operating sales growth (+ 2 %) in Europe was

higher than in the previous year. Sales developed positively

in most of ALTANA’s important sales markets in the region.

Only in Germany, Great Britain, Turkey, and a few Eastern

European countries were sales down on 2017.

Sales in the Americas remained almost the same as in

the previous year, after business had grown significantly

in 2017. Adjusted for positive acquisition and negative ex

changerate effects, sales grew by 3 % in operating terms.

Operating sales growth in the U.S. – still ALTANA’s largest

sales market, accounting for 19 % of total sales – reached

2 %. A main reason for the increase was an increase in oil

and gas exploration activities. On account of the increase

in annualaverage crudeoil prices new mining sources were

tapped in the U.S., and thus the demand for specialty

products from the BYK division was higher than in the pre

vious year. In Brazil and other important Latin American

Key figures

2017 2018 ∆ % ∆ % op.¹

in € million

Sales 2,247.0 2,307.4 3 4

Earnings before interest, taxes, depreciation and amortization (EBITDA) 470.0 430.6 8 8


Operating income (EBIT) 335.9 295.8 12 12


Earnings before taxes (EBT) 306.0 264.1 14 14

EBT margin 13.6 % 11.4 %

Net income (EAT) 234.6 187.0 20

EAT margin 10.4 % 8.1 %

¹ Operating deviation, i. e. adjusted for acquisition and divestment as well as exchangerate

effects. This adjustment also applies to other sections of this management report.


markets, sales grew disproportionately compared to the prior

year. Overall, the Americas accounted for 27 % of total

Group sales, a slight drop from 2017 (previous year: 28 %).

Asia was responsible for 33 % of Group sales, un

changed from 2017. Recording operating growth of 6 %,

Asia was the biggest growth driver of all of the regions,

as in the previous year, though the sales dynamic cooled off

somewhat. Sales in China, in particular, developed well,

and we achieved operating growth of 5 % there. With an

unchanged 18 % share of total sales, China is the Group’s

secondlargest sales market. Nearly all of the other Asian

countries also made positive contributions to the sales

growth, most notably India and Japan, each achieving oper

ating sales growth of 10 %.

Sales Performance of BYK

In 2018, the BYK division boosted its sales by 3 %, or 35.2

million, to € 1,065.6 million (previous year: € 1,030.4 mil

lion). This increase was slightly influenced positively by the

prorated effects from the acquisition of the PolyAd com

panies in 2017, which, however, could not completely com

pensate the negative burden from exchangerate changes.

Adjusted for these two effects, operating sales growth was

4 % visàvis the previous year. In the course of 2018, the

sales dynamic developed unevenly and noticeably flagged,

especially in the second half of the year.

In all markets and nearly all regions, BYK recorded sales

growth. This is primarily due to price increases and positive

productmix effects. The sales volume, however, was slightly

Sales by division

1

4

2

3

16.6 %

21.9 %

46.2 %

15.3 %

in € million 2017 2018 ∆ % ∆ % op.

1 BYK 1,030.4 1,065.6 3 4

2 ECKART 385.3 382.6 1 1

3 ELANTAS 488.7 506.6 4 4

4 ACTEGA 342.6 352.6 3 6

Total 2,247.0 2,307.4 3 4

Sales by region

1

4

2

3

27.1 %

33.3 %

37.9 %

1.7 %

in € million 2017 2018 ∆ % ∆ % op.

1 Europe 852.3 875.0 3 2

thereof Germany 275.7 273.4 - 1 - 1

2 Americas 623.6 624.4 0 3

thereof U.S. 436.3 434.8 0 2

3 Asia 733.5 769.4 5 6

thereof China 399.0 421.2 6 5

4 Other regions 37.6 38.6 3 3

Total 2,247.0 2,307.4 3 4


down on the previous year. An essential factor for the sales

growth was the demand in oil and gas activities. But business

with additives in the plastics industry and industrial appli

cations, as well as sales of testing and masuring instruments,

also developed positively. An increasing scarcity of raw

materials in the course of the year curbed growth in some

product groups. The slowdown in economic growth in

the second half of the year was particularly due to declining

demand for applications in the automotive industry.

In terms of regions, the division’s growth was driven by

Asia – and especially by the growing demand among

customers in BYK’s secondlargest sales market, China. Sub

stantial sales growth was also generated in other impor

tant Asian countries, above all in Thailand, Japan, and India.

While sales in Europe did not grow at the same pace as

in the Asian sales region, they showed a very stable develop

ment. A slight decrease in sales in Germany, Great Britain,

and Turkey was more than compensated for by other impor

tant markets on the continent. The sales performance in

the Americas remained virtually the same as in the previous

year. The demand in Canada and Brazil, however, was dis

proportionately higher than in the previous year.

Sales Performance of ECKART

Sales in the ECKART division decreased by 1 % to € 382.6

million (previous year: € 385.3 million). Adjusted for slightly

negative exchangerate effects, however, sales were up by

1 % in operating terms. This is primarily due to price increases,

which were set against negative productmix effects. The

sales volume of effect pigments was slightly lower than in the

previous year.

Particularly due to steadily declining demand in the auto

motive industry in the second half of 2018, sales in this

segment and in industrial applications were significantly lower

than in 2017. Nor did sales with customers in the graphic

arts industry reach the previous year’s level. However, ECKART

was able to expand its activities in the cosmetics sector in

the last fiscal year.

In terms of regions, the division’s operating sales growth

varied. While Europe developed stably at the 2017 level,

the Americas and Asia recorded slight operating sales growth.

Sales Performance of ELANTAS

In 2018, sales in the ELANTAS division increased by 4 %, or

€ 17.8 million, to € 506.6 million (previous year: € 488.7

million). The positive sales effect from the two acquisitions

in the U.S. and China in 2017 was completely offset by

negative exchangerate influences, and so after adjustments

operating sales growth amounted to 4 %. The positive

sales devel opment is due to price increases and positive

productmix effects. The sales volume decreased slightly

in yeartoyear terms.

This development was reflected in all of the important

fields of business. The division’s biggest product segment,

wire enamels, accounted for the largest share of the sales

growth. But sales in the electric segment also improved

slightly over the previous year.

In 2018, the demand for the division’s products was gen

erally positive in all core regions, with Asia again recording

the strongest sales performance in operating terms. Asia ac

counted for more than half of the division’s total sales in

2018. The sales achieved in China, ELANTAS’ most im por tant

market, and in India developed disproportionately. The

sales performance in Europe was also positive overall. Sales

increased in many markets. In all of the important sales

markets in the Americas, ELANTAS further expanded sales in

2018. The only country with lower sales was the U.S.

Sales Performance of ACTEGA

The ACTEGA division had the highest operating sales growth

of all our divisions in 2018. Nominal sales increased by 3 %,

or € 10 million, to € 352.6 million (previous year: € 342.6 mil


lion). Adjusted for negative effects from exchangerate fluc

tuations, sales rose by 6 % in operating terms. In the course of

the year, the growth dynamic developed quite positively

within the division, on the one hand due to a higher sales vol

ume, and on the other due to the improved product mix

compared to the previous year, supported by a slightly posi

tive effect from price increases that were implemented.

In the important application fields ACTEGA achieved a

positive business performance. It significantly boosted

some activities with functional products for food packaging.

But sales decreased in business with magazines and printed

supplements as well as with labels.

In 2018, the regional sales structure of the ACTEGA

division shifted slightly in favor of Europe at the expense of

the Americas. The development in the core regions was

generally positive with the exception of the German sales

market. In operating terms sales in Europe, the division’s

largest region, increased significantly in the year under re

view. In Europe, positive sales impetus came from Italy,

Spain, France, and many Eastern European countries, which

more than compensated for the slightly lower sales in

Germany. In the Americas, sales rose in the U.S. and in Brazil,

the division’s two largest single markets in the region in

operating terms, visàvis the previous year. The division also

upped its sales in Asia in 2018.

Earnings Situation

The company’s operating sales growth is not reflected by the

earnings situation, because the price increases that were

implemented did not completely offset the strongly rising ma

terial costs in the course of the year. As a result, earnings

before interest, taxes, depreciation and amortization (EBITDA)

decreased visàvis the strong previous year by 8 %, or

€ 39.4 million, to € 430.6 million (2017: € 470.0 million).

Since the positive acquisition effects and the negative

exchangerate effects completely balanced each other out

in the earnings, sales also fell by 8 % in operating terms after

adjustments. Nevertheless, the EBITDA margin in 2018 of

18.7 % (previous year: 20.9 %) is within our strategic target

range of 18 % to 20 %.

Both the performance of the absolute EBITDA and the

EBITDA margin were below our expectations. At the beginning

of 2018, we had expected an earnings growth on a par

with the level of sales growth and thus profitability oriented

more closely to the upper edge of our strategic target

range. The discrepancy to the forecast was primarily due to

the unexpectedly high increase in material costs.

This important cost factor for ALTANA, which encom

passes rawmaterials and packaging costs, developed nega

tively in relative terms. The material usage ratio, the ratio

of these costs to sales, increased substantially to 43.8 % in

2018 (previous year: 41.5 %). The main reasons were

the steady increase in rawmaterials prices in the course of

the year, especially the price of oilbased raw materials

and specialty products, as well as in part extreme scarcities

and limited availabilities of important raw materials. This

trend particularly burdened BYK, ELANTAS, and ACTEGA.

Other cost factors important for ALTANA’s earnings

largely developed in proportion to sales. Personnel expenses

rose only slightly, by 1 %. The ratio of total personnel

expenses to sales fell to 20.9 % (previous year: 21.3 %).

In 2018, the structure of functional costs did not

change significantly compared to 2017. Within production

costs, external services rose disproportionately due to a

number of strategic projects, as did maintenance costs due

to high capacity utilization. In this area, personnel costs

also rose disproportionately. But other kinds of costs that are

important in production displayed a stable development

or a downward trend.

In 2018, selling and distribution expenses increased

slightly over the previous year, but the relative ratio to sales

decreased. The drivers were lower depreciation and amor


tization and personnel expenses in sales. Outward freight

and storage costs increased, however.

Of all the functional cost areas, research and develop

ment expenses exhibited the strongest growth in 2018,

as in the previous year. On account of the continuous expan

sion of development activities in nearly all of our four divi

sions, as well as the expansion of strategic activities to build

future fields of business, the ratio of research and develop

ment costs to sales rose from 6.3 % to 6.7 %. This trend was

additionally driven by initiatives in applicationoriented

research and steppedup activities to develop new technolo

gies that can be used to market innovative products. In

order to successfully implement these goals, we invested in

human resources and labor in 2018, which particularly

in the functional area of research and development led to

higher personnel expenses as well as higher depreciation

and amortization.

In 2018, administrative expenses decreased compared to

2017, and the ratio of administrative expenses to sales de

creased significantly. This development was primarily due

to relatively stable personnel expenses, by far the most impor

tant cost position, which were influenced by lower vari

able salary components. In addition, travel expenses fell sig

nificantly.

The balance of other operating income and expenses

was down on the previous year. This development is almost

exclusively due to the absence of the oneoff earnings of

the previous year from the reimbursement of costs from the

Renewable Energies Law (EEG).

In 2018, the level of deprecation and amortization was

the same as in the prior year. As a result, earnings before

interest and taxes (EBIT) developed on a par with the EBITDA.

The EBIT reached € 295.8 million, under the previous year’s

level (€ 335.9 million).

Sales (in € million )

2014 1,952

2015 2,059

2016 2,075

2017 2,247

2018 2,307

EBITDA (in € million )

2014 397

2015 391

2016 453

2017 470

2018 431

Multi-period overview of the earnings situation


The financial result was € 7.2 million, an improvement over

2017 (€ 8.6 million). The background for the improvement

was lower interest expenses resulting from the repayment of

promissory notes. On the other hand, the result of compa

nies accounted for using the atequity method worsened, from

€ 21.3 million in the previous year to € 24.5 million in

the 2018 fiscal year. This decline is due to the fact that the

Israeli Landa Corp. recorded higher losses for the year.

The company’s 2018 fiscal year was burdened by the planned

higher expenditure in the course of preparations for the

broadbased market introduction of future digitalprinting

solutions.

Earnings before taxes (EBT) dropped to € 264.1 million

(previous year: € 306.0 million), and net income (EAT) to

€ 187.0 million (previous year: € 234.6 million). Despite the

earnings decline, income tax surpassed the previous year’s

level. This is mainly due to the inclusion in the consolidated

financial statements of the onetime positive special effect

totaling € 20 million from the tax reform in the U.S. in the

previous year.

Asset and Financial Situation

In the past fiscal year, ALTANA invested a total of € 187.0 mil

lion in intangible assets and property, plant and equipment.

As a consequence, the capital expenditure was at the same

high level as in the previous year (€ 188.0 million), which

Capital Expenditure

Capital expenditure by division

1

4

2

3

12.6 %

12.1 %

63.5 %

1.5 %5 10.3 %

in € million 2017 2018 ∆ %

1 BYK 58.3 118.8 104

2 ECKART 17.1 23.5 38

3 ELANTAS 13.8 22.7 64

4 ACTEGA 96.9 19.2 80

5 Holding 1.9 2.8 45

Total 188.0 187.0 1

Capital expenditure ALTANA Group (in € million)

2014 90

2015 86

2016 122

2017 188

2018 187

Germany Abroad

131 57

51 71

32 58

44 42

72 115

Business Development60

in 2017 was mainly influenced by the acquisition of the

metallography technology of the Israeli company Landa Labs.

The investment ratio, that is the ratio of investments to

sales, was 8.1 % due to strategic growth projects and thus

above our longterm target range of 5 % to 6 %.

Overall, € 171.8 million were invested in property,

plant and equipment (previous year: € 96.4 million). Starting

in 2017, large strategic projects were launched and

advanced that encompass the expansion of manufacturing

and laboratory capacities and that had a decisive influence

on the increase in the investment level. In the past fiscal year,

investments in intangible assets reached € 15.2 million,

after € 91.6 million in 2017. The high level in the previous

year is primarily a result of the acquisition of technology

from the Israeli company Landa Labs.

In the last fiscal year, the regional distribution of invest

ments changed significantly. The European share fell from

80 % to 51 %, and German sites again accounted for the

largest share. The Americas, however, recorded a signifi

cant increase of 30 % (previous year: 14 %), while Asia’s share

also rose in the 2018 fiscal year, reaching 18 % (previous

year: 6 %).

In 2018, the BYK division invested a total of € 118.8 mil

lion, about twice as much as in the previous year (€ 58.3

million). The investment activity focused on the expansion of

manufacturing capacities for rheology additives in the U.S.

as well as the building of a new site in Shanghai in order to

concentrate sales and research activities in China at one

site in the future. Further investments involved research and

development capacities at various sites as well as a facility

for carrying out automated product tests on additives at the

Wesel site.

The investment volume in the ECKART division was

€ 23.5 million, higher than in 2017 (previous year: € 17.1 mil

lion). By far the largest share was invested in the division’s

biggest site in Güntersthal, followed by sites in the U.S. and

Switzerland.

The ELANTAS division invested € 22.7 million in property,

plant and equipment and intangible assets, more than in the

previous year (€ 13.8 million). In the past fiscal year the

focus of investment was on the division’s sites in the U.S.,

Italy, Germany, and India.

Investing € 19.2 million, the ACTEGA division’s capital

expenditure was at a much lower level than in 2017

(€ 96.9 million). But the decrease was due solely to the acqui

sition in 2017 of the metallography activities and the

technology portfolio for labels and packaging in the U.S. The

capital expenditure in the past fiscal year mainly involved

investment in capacity expansions as well as research and

development labs at the division’s German sites.

Balance Sheet Structure

Key figures

2017 2018 ∆ %

in € million

Total assets 3,147.7 3,221.9 2


Net debt () / Net financial assets (+)¹ ( 78.0) ( 95.6) 23

¹ Comprises cash and cash equivalents, shortterm financial assets, marketable securities, loans

granted, debt, and employee benefit obligations.

In the course of the 2018 fiscal year, the ALTANA Group’s

total assets climbed from € 3,147.7 million to € 3,221.9 mil

lion. The increase of € 74.1 million, or 2 %, is mainly due

to continued high investment activity and exchangerate

effects. Particularly the change of the euro in relation to

the U.S. dollar led to an increase in the carrying amounts of

assets and debts of the U.S. Group companies in the con

solidated financial statements.

Intangible assets fell slightly to € 1,044.2 million (pre

vious year: € 1,056.9 million). Additions resulted from the

operating business and primarily involved the capitalization of


customer relationships and software that had been acquired.

In the past fiscal year, there were no major business combina

tions or technology acquisitions. On the other hand, prop

erty, plant and equipment rose significantly, from € 774.4 mil

lion to € 868.2 million. With additions of € 171.8 million,

the level of investment in property, plant and equipment was

significantly higher than depreciation and amortization.

Exchangerate effects also led to an increase in the carrying

amount in the Group currency, the euro.

On December 31, 2018, noncurrent assets totaled

€ 2,083.7 million (previous year: € 2,021.6 million), € 62.1

million up on the previous year. Their share in total assets

was 65 % on the balancesheet date (previous year: 64 %).

The change in current assets was influenced particu

larly by the increase in net working capital and partially off

set by the decrease in the amount of cash and cash equiva

lents. Both inventories and trade accounts receivable grew in

the past fiscal year. Inventories rose by 13 % to € 373.0 mil

lion, primarily due to the higher rawmaterial volume as some

raw materials were purchased in larger quantities on

account of the very limited availability at times and the ex

pected price increases. This gave rise to an increase in the

ratio of the entire net working capital. The ratio, in relation

to the business development of the previous three months,

was 109 days and thus significantly higher than at the end

of 2017 (previous year: 101 days), surpassing our expecta

tions. At the beginning of the year we had forecast a slight

improvement of the ratio. As opposed to the ratio of

inventories, the ratios for trade accounts receivable and pay

able basically developed stably. Total assets increased

slightly to € 1,138.1 million (previous year: € 1,126.1 million).

Cash and cash equivalents decreased in the course of

the year, mainly due to the continued high investments as

well as the repayment of a tranche of the promissory note

loan and the payment of dividends amounting to € 239.7 mil

lion (previous year: € 275.7 million).

On the liabilities side, changes arose primarily due to

the earningsrelated increase in equity. Group equity rose by

Structure of consolidated balance sheet

Assets Dec. 31, 2017 Dec. 31, 2018

€ million % € million %

Noncurrent assets 2,021.6 64 2,083.7 65

Inventories, trade accounts receivable and other current assets 828.8 27 873.9 27

Cash, shortterm financial assets, and cash equivalents and marketable securities 297.3 9 264.3 8

Total asset 3,147.7 100 3,221.9 100

Shareholders’ equity and liabilities Dec. 31, 2017 Dec. 31, 2018

€ million % € million %

Shareholders’ equity 2,214.2 70 2,344.6 73

Noncurrent liabilities 486.6 15 417.1 13

Current liabilities 446.9 14 460.2 14

Total shareholders’ equity and liabilities 3,147.7 100 3,221.9 100


€ 130.4 million, or 6 %, to € 2,344.6 million (previous year:

€ 2,214.2 million). The increase is attributable to the surplus

in the 2018 fiscal year, and, to a lesser extent, to effects

of exchangerate fluctuations. The equity ratio increased to

73 % on December 31, 2018 (previous year: 70 %).

At the end of 2018, liabilities from promissory note loans

remained an essential component of the debt. These

liabilities were reduced further in the past fiscal year by the

scheduled repayment of a tranche (€ 64 million), and

amounted to € 128 million at the end of the year. Due to

reclassifications of the promissory note tranche due in

2019 (€ 80 million), noncurrent liabilities decreased to

€ 417.1 million (previous year: € 486.6 million). All other

important noncurrent debt items hardly changed compared

to the end of the previous year. The share of total noncur

rent debt dropped from 15 % to 13 %.

The amount of current debt on the balance sheet in

creased slightly from € 446.9 million to € 460.2 million on

December 31, 2018. But within current debt individual

items demonstrated a contrary development. Due to the

reclassification of the promissory note tranche due in

2019 (€ 80 million), current debt increased, and current ac

crued income tax also rose. On the other hand, other

current provisions decreased, above all due to the disclosure

of lower provisions for employee bonuses.

The net financial debt, comprising the balance of cash

and cash equivalents, shortterm financial assets, current

marketable securities, loans granted, debt, and employee

benefit obligations, reached € 95.6 million at the end of

2018, after net financial assets of € 78.0 million were dis

closed in the previous year.

Principles and Goals of Our Financing Strategy

We generally aim to finance our operating business activities

from the cash flow from operating activities. The same

applies to the need for capital expenditure, which caters to

the continual expansion of business activities.

As a result, our financing strategy is oriented to keeping the

cash and cash equivalents generated within the Group

centralized. In addition, a financing framework is sought that

enables ALTANA to flexibly and quickly carry out acquisitions

and even large investment projects beyond the accustomed

scope.

To successfully implement these goals, we manage

nearly all of the Group’s internal financing centrally via

ALTANA AG. To this end, cash pools are set up for the im

portant currency areas.

At the end of 2018, ALTANA’s liabilities totaled € 128

million due to the issuance of two promissory note loans

in 2012 and 2013 (€ 350 million in total). The outstanding

promissory note loans are divided into tranches with fixed

interest rates and different maturities. The loans will be re

paid by 2020. Furthermore, there is a general syndicated

credit facility of € 250 million. The term of this credit facility

will last until 2022 and had not been utilized on the bal

ancesheet date.

This financing structure offers ALTANA the flexibility it

needs to appropriately take advantage of shortterm or

investmentintensive growth opportunities. The distribution

of the maturities of the financing instruments we use

enables us to optimally control repayment of liabilities with

inflows from operating cash flow.

We continue to use offbalancesheet financing instru

ments to a very limited extent. These include purchasing

commitments, operating leasing commitments, and guaran

tees for pension plans. Details on the existing financing

instruments are provided in the online Consolidated Financial

Statements.


Liquidity Analysis

Key figures

2017 2018 ∆ %

in € million

Cash flow from operating activities 302.3 296.2 2

Cash flow from investing activities ( 325.1) (195.7) 40

Cash flow from financing activities ( 67.4) (135.9) 102

In the course of 2018, the level of cash and cash equivalents

fell by € 36.0 million to € 239.7 million (previous year:

€ 275.7 million). Cash inflow from operating activities was

€ 296.2 million and thus almost on a par with the previous

year (€ 302.3 million), despite the lower Group net income.

This is primarily due to the fact that earnings in the pre

vious year were favored among other things by noncash one

off earnings in the area of income tax. In the change of

net working capital positions, the effects from a relatively low

increase in trade accounts receivable compared to the pre

vious year were offset by a slower increase in trade accounts

payable.

Compared to 2017, cash flow from investment activities

decreased significantly to € 195.7 million (previous year:

€ 325.1 million). Investments in intangible assets and proper

ty, plant and equipment were at the previous year’s level,

and also included larger technology acquisitions. No new

business activities were acquired in the past fiscal year.

The cash flow for acquisitions had reached € 141 million in

2017.

The cash flow from financing activities amounted to

€ 135.9 million in 2018 (previous year: € 67.4 million). The

current debt outflows concerned the scheduled repayment

of a promissory note tranche (€ 64.0 million) and thus were

roughly the same as in the previous year. In 2017, in

addition to the repayment of a promissory note tranche of

€ 32.0 million, debt resulting from the PolyAd activities

was also reduced. In the 2018 fiscal year, ALTANA AG paid

a dividend amounting to € 80 million, after no dividend

was paid in the previous year.

Value Management

Key figures value management

2017 2018

in € million

Operating capital (annual average) 2,509.7 2,762.7

Operating earnings 284.8 258.6


Weighted average cost of capital 8.0 % 8.0 %

ALTANA Value Added (relative AVA) 3.3 % 1.4 %

ALTANA Value Added (absolute AVA) 84.0 37.6

ALTANA determines the change in the company’s value via

the key figure ALTANA Value Added (AVA), whose calcu

lation is explained in the “Group Basics” section. In 2018, a

positive contribution was made to our company’s value

again, which, however, was lower than in 2017 and was

below our expectations.

The decline in earnings due to material costs is reflected

in lower operating earnings, which at € 258.6 million did

not reach the very good level of the previous year (€ 284.8

million). At the same time, the Group’s average capital

employed rose to € 2,762.7 million in 2018 (previous year:

€ 2,509.7 million). This increase in capital largely resulted

from the fact that company and technology acquisitions made

in 2017 were considered in the financial statements for


the first time for a full year, and due to continued high invest

ment in property, plant and equipment. The increase in

net working capital and changed exchangerate relations also

contributed to the higher capital level.

In 2018, the return on capital employed (ROCE) amount

ed to 9.4 % and thus did not reach the previous year’s level

(11.3 %). With an unchanged cost of capital rate of 8.0 %, the

relative AVA reached 1.4 % (previous year: 3.3 %).

Analogous to the expansion of the operating capital,

the cost of capital rose to 221.0 million (previous year:

€ 200.8 million). As a result, the absolute AVA amounted to

€ 37.6 million in the past business year (previous year:

€ 84.0 million).

The slight decrease of key value figures that was fore

cast for 2018 due to the fact that the full capital effect

of business combina tions was considered for the first time

could not be achieved, particularly due to the weaker

earnings performance.

Overall Assessment of Our Business Performance and Business Situation

In the course of 2018, the macroeconomic framework conditions

deteriorated increasingly. At the same time, the prices of raw

materials relevant for ALTANA rose significantly due to the crude

oil price development.

Nevertheless, ALTANA achieved its growth targets in this challeng

ing business environment. However, the earnings performance

did not meet our expectations because we did not fully pass on

the rawmaterial price increases to the market. Nevertheless,

we continued to make considerable investments in our strategic

growth fields.

Our balance sheet continued to show a very solid structure at

the end of 2018 and offers sufficient financial headroom for in

vestments in sustainable profitable growth.



Innovation

As a specialty chemicals company, innovations are an impor

tant factor for ALTANA, enabling us to offer our customers

new, competitive solutions and at the same time to meet

cuttingedge requirements regarding performance profile,

costs, environmental protection, and sustainability. Thanks to

close cooperation with our customers we are integrated

into new fields of development at an early stage and thus can

develop customized solutions quickly and reliably. We build

on existing competencies, on the one hand, and gain access

to new ones on the other, in order to continuously adapt

our product portfolio to market and customer needs. State

oftheart analytics in chemical labs as well as application

technology testing laboratories geared to specific features are

available to our researchers and developers for targeted

development.

In addition to the development activities in the busi

ness divisions, selected innovations are initiated and coordi

nated at the ALTANA level, aimed at tapping new business

fields and absorbing technology and market trends. This is

achieved through different procedures, namely, through

the ALTANA Institute, the central management of technology

platforms, as well as corporate venturing investments.

With the help of the ALTANA Institute, external networks

and close cooperation with universities and research insti

tutes around the world are used to harness outside impetus.

Through the use of a successful openinnovation approach

coupled with the use of synergies by our divisions, ALTANA

manages to create longterm and partially transformative

innovations and to develop solutions.

Within the framework of technology platforms, based

on the work of past years ALTANA advanced digital print

ing processes and the printing inks and materials needed for

printed electronics. Additionally, initiatives in the field of

3D printing were bolstered, ventures whose success opens

up further possibilities in additive manufacturing. In 2018,

ALTANA also expanded its competencies in the field of new

innovative coating technologies, including laser transfer

printing technology.

Due to the close cooperation with the central depart

ment Corporate Venturing, technology and market potential

are continually examined, and through targeted invest

ments in transformative technology entry into new attractive

markets developed. In this context, ALTANA acquired a

stake in the Israeli industrial digital printing company Velox

Ltd. in 2018, thus expanding its technology and invest

ment portfolio in this area.

The basis of our innovative strength is an open and

dynamic corporate culture that gives the 1,128 employees in

our research and development centers around the world

the freedom to act creatively and entrepreneurially. The equip

ment in our development centers enables our employees

to implement their ideas in marketable solutions. In the year

under review, expenses for research and development

Research and development expenses (in € million )

2014 113.9

2015 128.1

2016 129.3

2017 142.5

2018 154.1

66 Innovation and Employees

amounted to € 154.1 million (previous year: € 142.5 million).

The fact that the share of research and development

expenses in sales was higher once again, at 6.7 % (previous

year: 6.3 %), is yet another expression of our innovative

focus.

Employees

In the course of 2018, the number of people employed by

the ALTANA Group climbed by 242, or 4 %, to 6,428

(previous year: 6,186). The increase is primarily attributable

to investments in our strategic growth fields and the expan

sion of our business activities. Business combina tions played

no role in the development of our staff numbers in 2018,

while in 2017 111 employees were added due to acquisi

tions. The divisions within the Group exhibited different

growth rates in 2018.

In the BYK division, the number of employees rose by

124 to 2,324 (previous year: 2,200). The companies in

Germany, China, and the U.S. accounted for the most signif

icant share of the increase, against the backdrop of the

strategic expansion of business activities in the additives seg

ment and in the testing and measuring instruments busi

ness in Germany.

The number of employees in the ECKART division re

mained virtually constant at 1,718 people (previous year:

1,716). But the development within the division was uneven.

While a slight decrease was recorded at the division’s

American sites, the headcount at its Swiss, German, and

Chinese sites increased slightly due to the expansion of

business activities.

In the course of 2018, the workforce of the ELANTAS

division increased by 26 to a total of 1,087 people (pre

vious year: 1,061). The division’s companies in Italy, China,

and Germany accounted for the main share of the increase.

Meanwhile, staff numbers in the U.S. decreased.

ACTEGA’s headcount rose by 57 to 1,151 employees

(previous year: 1,094). The main reason was the expansion

of business activities in the course of the year by the divi

sion’s sites in Germany. The number of employees also in

creased in the U.S.

Staff numbers of the Group holding companies climbed

by 33 to 148 in the past fiscal year (previous year: 115),

recording the highestpercentage increase. This is mainly due

Employees in research and development

BYK 503

ECKART 224

ELANTAS 173

ACTEGA 221

Holding 7

Total 1,128

Employees by division

1

5

2

3

26.7 %

16.9 %

36.2 %

2.3 %

4 17.9 %

Dec. 31, 2017

Dec. 31, 2018

∆ %

1 BYK 2,200 2,324 6

2 ECKART 1,716 1,718 0

3 ELANTAS 1,061 1,087 2

4 ACTEGA 1,094 1,151 5

5 Holding 115 148 29

Total 6,186 6,428 4


to the implementation of a service company at the holding

level, in which mainly IT employees in the BYK and ECKART

divisions have been brought together so far in one ser

vice unit.

The functional structure of the workforce did not alter

significantly in the 2018 fiscal year. The number of staff

rose in all four functional areas. With 52 %, the same per

centage as in the previous year, or 3,373 people (previous

year: 3,198), most of the employees continued to work in

production. And this area accounted for the highestper

centage increase in 2018. Last year, the number of people

employed in research and development rose by 26 to

1,128 (previous year: 1,102).

The headcount in marketing and sales, as well as admin

istration, also increased in the course of 2018, by a total of

41 people. As in the previous years, administrative functions

continued to comprise the smallest share of the Group’s

workforce, with 925 people working in this area (previous

year: 889).

In 2018, all of the regions exhibited an increase in

staff numbers. In terms of the regional structure, there were

no major shifts in 2018 in comparison with 2017. The

European companies continued to employ by far the largest

number of people, with a headcount of 4,088 (previous

year: 3,927). At the end of the year, 3,320 people worked

in Germany (previous year: 3,196), the majority of them

at ECKART’s and BYK’s production and development sites, in

Hartenstein and Wesel, respectively. Staff numbers in the

Americas increased slightly by 31, from 1,477 employees in

the previous year to 1,508 at the end of 2018. The head

count in the Asian Group companies grew from 782 in the

previous year to 832, increasing by the highest percentage.

Employees by functional area

1

4

2

3

15.6 %

17.5 %

52.5 %

14.4 %

Dec. 31, 2017

Dec. 31, 2018

∆ %

1 Production and logistics 3,198 3,373 5

2 Marketing and sales 997 1,002 1

3 Research and development 1,102 1,128 2

4 Administration 889 925 4

Total 6,186 6,428 4

Employees by region

1 2

3

23.5 %

12.9 %

63.6 %

Dec. 31, 2017

Dec. 31, 2018

∆ %

1 Europe 3,927 4,088 4

thereof Germany 3,196 3,320 4

2 Americas 1,477 1,508 2

thereof U.S. 1,208 1,241 3

3 Asia 782 832 6

thereof China 476 513 8

Total 6,186 6,428 4

68 Innovation and Employees

At the end of the 2018 fiscal year, 1,692 women and

4,736 men worked for ALTANA. On the balancesheet date,

92 % of all employees had an unlimited employment con

tract and 8 % a limited employment contract. This ratio was

the same for both genders. Of the women employees,

78 % worked fulltime and 22 % parttime at the end of

2018. 98 % of the male employees worked fulltime.

Apart from its own employees, 161 people from employment

agencies worked for the ALTANA Group on December 31,

2018.

ALTANA competes internationally for specialists and

managers. Like all companies in the chemical industry, in the

years to come the ALTANA Group, particularly in Europe,

will enter a phase that due to the demographic development

makes precision succession planning indispensable already

today. As a result, talent management and humanresource

development play a key role in ALTANA’s agenda for the

future (Keep Changing Agenda). The main aim is to mobilize

people at ALTANA, to increase diversity at all levels, to fur

ther develop leadership culture, and in doing so to strength

en entrepreneurial thinking. To achieve these goals, we

reworked ALTANA’s competence model in 2018. Existing

humanresource instruments were evaluated with the

aim of optimizing personnel selection and the basis for hu

manresource decisions, and to promote lasting employee

loyalty to the company. As a result, succession planning, in

particular, will bear fruit in the future.

The “HR Transformation” project, which was launched

in 2017 and whose aim is to reposition ALTANA’s strategic

positioning of personnel activities, was pushed forward in

2018. Initially, a comprehensive evaluation of personnel

related services and processes was made on a global level.

These activities will continue in the coming years. The

project’s aim of redefining the worldwide organization of

ALTANA’s humanresource department, will be supported

by the implementation of a global IT system. With the help

of this IT system, a platform for farreaching digitalization

in the environment of humanresource management is to be

created. The main aim is to continuously further expand

strategic humanresources work in order to meet the future

needs of the ALTANA organization, which is steadily

expanding due to organic and acquisitionrelated growth. The

basis of all of these activities continues to be ALTANA’s

business principles as well as the company’s defined and

transparently communicated values, which determine

the orientation of our action and employee management.

Declaration of Corporate Governance Pursuant to

Section 289f (4) of the German Commercial Code (HGB)

Promoting women in management positions remained

a focus in the 2018 fiscal year. By intensifying measures that

had been introduced in the past, and with new instru

ments, we further anchored the expansion of diversity in our

humanresource management. One focus was promoting

women. The ratio of women in ALTANA’s national and inter

national management development programs has in

creased significantly in recent years. In addition, our further

education program includes special offers for women.

The mentoring program for women launched in 2016 was

continued in 2018. Furthermore, various informal plat

forms were created to intensify dialog on this issue. Among

them are regular meetings of women in management

positions that focus on strengthening the network, and work

shops for further development of familyfriendly employ

ment models intended to contribute to continual improve

ment of the general working conditions at ALTANA.

ALTANA’s medium to longterm goal is to increase the

share of women in management positions to the percent

age of women in the entire workforce.

In keeping with legal requirements regarding equal par

ticipation of women in management positions in private

business and the public service sector, ALTANA AG’s Supervi

sory Board specified targets for the share of women in

the company’s Management and Supervisory Boards. For the


Supervisory Board, a target of 25 % was resolved by the end

of the targetachievement period on June 30, 2020. For the

Management Board, no personnel changes or an extension

of the body are planned by the end of the targetachieve

ment period, and so the body will continue to be without any

woman. For the first management level under the Man

agement Board, the Supervisory Board resolved a share of

women of 20 % and for the second management level a

share of 30 %. Targets were also defined for the German

companies subject to codetermination.

Subsequent Events

In January 2019, we participated as planned in a further cap

ital increase in Landa Corp. totaling 50 million U.S. dollars.

After the capital increase, ALTANA’s share in the company

remains at 33.3 %.

70 Innovation and Employees I Subsequent Events I Expected Developments


Future Orientation of the Group

We do not plan on making any fundamental changes to the

Group’s strategy or organizational structure in the next

two years. The focus on specialty markets and the offer of

innovative chemical solutions will continue to drive our

business development.

We do not expect our entry into new market segments

or application areas to lead to any significant changes in

our sales structure in the medium term. We also expect the

balanced regional sales distribution to basically remain

stable.

Acquisitions, however, could lead to changes in our sales

and market structures. Bolton acquisitions and particu

larly the integration of a new business division could result in

a shift.

Economic and Industry Outlook

Global economic growth is expected to weaken slightly in

2019. The International Monetary Fund (IMF) forecasts a de

crease of 3.5 % in world economic output. As a result, the

growth would be below the level expected for 2018 (3.7 %).

This development should be driven primarily by the

industrial nations. The IMF expects a slight slowdown

in growth for the U.S. (from + 2.9 % in 2018 to + 2.5 % in

2019) and also for the Eurozone (from + 1.8 % in 2018

to + 1.6 % in 2019). This decline will mainly be driven by the

growing uncertainty regarding geopolitical risks, which

could lead to restrictions on economic trade relations. A de

cline in privatesector demand is anticipated in important

industrial countries, including Germany.

According to IMF forecasts, growth in the emerging

countries should be on a par with 2018, at 4.5 %, and thus

surpass the expected growth of the industrial economies

(+ 2.0 %). This development should be driven particularly by

economies in Asia, primarily China (+ 6.2 %) and India

(+ 7.5 %). Growth in Latin America is expected to increase

visàvis 2018, to 2.0 %, which, however, would be at a

lower level than the emerging economies in Asia.

Against the background of the global economic outlook,

we expect the growth in the general chemical sector to

be at the level of the previous year. The American Chemistry

Council (ACC) forecasts that worldwide chemical produc

tion will increase by 3.0 %, after an expected 2.8 % in the

past fiscal year. This growth should be driven mainly by

the chemical industry in North and Latin America. But chem

ical production is also expected to show a positive devel

opment in Europe and Asia.

On the basis of the economic and industryspecific

framework conditions, we assume that the general demand

on all of the markets relevant for ALTANA will basically be

positive, although there will be regional and marketspecific

differences. The extent to which changes in storage levels

along the value chain will influence the actual demand for the

products of our divisions largely depends on the expected

short to mediumterm development. Stocklevel changes can

lead to significant effects.

The development of crudeoil prices cannot be predict

ed reliably. We expect that in 2019 there will be no sig

nificant price movements. The availability, pricing, and con

sumption volume of chemical products are subject to the

influence of the crudeoil market, albeit to different extents.

In addition, the expectations of market participants in

terms of the future development of oil prices can result in sig

nificant changes in the level of storage along the entire

value chain of the chemical industry.

As in the previous years, the exchangerate relations

important for ALTANA may continue to show pronounced

volatilities. The development of regional interest rates and

economic output, as well as political influences, can be of

decisive importance for exchangerate fluctuations. Since

the intensity and direction of the exchange rates cannot be


predicted, it is not possible to make concrete statements

about the influence. Concrete risks can result from a devia

tion of the actual exchangerate development from our

planning assumptions.

Expected Earnings, Asset, and Financial Situation

Expected Sales and Earnings Performance

On the basis of the growth anticipated for the global econ

omy, we expect the demand for our products and services

to exhibit a positive development in the new fiscal year. We

expect our operating sales growth, i. e. sales growth ad

justed for exchangerate and acquisition effects, to be in the

1 % to 5 % range. This growth should result from an

increase in the sales volume and positive effects from price

increases and shifts in the product mix.

We expect nominal sales in 2019 to be influenced by

negative effects of exchangerate changes. For the most

part, sales in the divisions should develop in the same range

as Group sales.

In terms of the most important functional cost factors,

we do not foresee significant shifts of cost ratios in relation

to sales. We expect the materials cost ratio to largely under

go a stable development at the level of the past fiscal year.

For personnel expenses and other fixed cost figures, we

project a relative increase at the same level as sales growth.

Against this background, we anticipate that in 2019 the

EBITDA margin will develop roughly at the level of the

previous year and thus within our strategic target range of

18 % to 20 %.

After 2019, we expect stable growth momentum with

slightly higher profitability.

Expected Asset and Financial Situation

There should not be any significant shifts in the balance

sheet structure in 2019. In the next two years, our capital

expenditure for property, plant and equipment and intan

gible assets should be above our longterm target range of

5 % to 6 % due to strategic growth projects. The develop

ment of the absolute values of net working capital should be

analogous to the general business development, though

we are striving to slightly improve the ratios.

Based on the anticipated business performance, we

should achieve liquidity surpluses from operating activities.

These surpluses will be used primarily to finance invest

ments and bolton acquisitions. In addition, we plan to repay

the promissory note loans on schedule in 2019 and 2020.

We project the value management key figures to in

crease slightly in 2019 compared to the past fiscal year. This

should result from an improved earnings situation.

Risks

Management and control of the ALTANA Group are geared

to the strategy that has been defined and the target levels

derived from it. Due to changes in the economic environment

or internal factors of influence, it might not be possible to

implement the strategy successfully or to achieve targets in

the planned time frame or to the planned extent. To be

optimally prepared for such situations, ALTANA systematically

identifies, evaluates, and considers risks within the frame

work of decisionmaking processes.

To anchor our risk policy at all decisionmaking levels,

we established a Groupwide risk management system that

brings together various information, communications, and

monitoring systems. Core elements of our risk management

include strategic corporate planning, internal reporting,

Expected Developments72

risks can be rated based on this assessment. Risks rated as

very high are risks which could cost the company € 25 million

or more in the next twelve months. Individual risks that

could cost the company between € 12 million and € 25 mil

lion are rated as high risks; risks that would cost between

€ 5 million and € 12 million are categorized as medium risks,

and risks that would cost less than € 5 million are deemed

low risks. The prioritization resulting from the assessment de

termines focal points for the development and initiation of

countermeasures to prevent or reduce the potential effects

of risks.

The individual risks and risk fields described in the

following pages could have a material adverse effect on the

Group’s earnings, financial, and asset situation in the years

to come and thus give rise to a negative deviation from the

forecast development. For individual risks categorized as

“medium,” “high,” and “very high” we address changes in

our appraisal compared to the previous year.

Economic and Industry Risks

The development of the general economic conditions world

wide has a decisive impact on our business performance.

The performances of the economies of the U.S., China, and

Germany – industrial nations important for ALTANA – have

a particularly strong impact on the direction and intensity of

demand for our products.

A global economic crisis leading to an economic collapse

would bring about significant sales decreases with corre

sponding influences on our earnings. Recessions limited to

certain regions in sales markets important for us could also

significantly impair our business performance. With the global

orientation of our sales activities, we try to shape our de

pendence on regional or national markets in such a way that

the effects of geographically confined economic crises on

the Group are limited.

our internal control system, compliance organization, and

risk management in the strict sense, i. e. the identification,

documentation, and evaluation of risks including the deriva

tion of appropriate precautionary measures and counter

measures.

Our strategic corporate planning is closely tied to our

medium to longterm financial planning. The extent of the

fulfillment of our targets is examined in monthly reports on

the company’s business performance and in our shortterm

financial planning. Apart from an analysis of the current

business situation, our expectations for the current fiscal year

are discussed extensively at the level of the divisions three

times a year. As a result, deviations from planned develop

ments can be recognized and countermeasures introduced

if necessary.

Our internal control system, which is oriented to

the standards of the internationally recognized COSO model,

defines organizational measures for preventing damage

from being done to the company, among other things. In

connection with our established compliance organization,

it aims to prevent possible violations of guidelines and laws

on the part of employees.

At ALTANA, risk management in the strict sense is

viewed as the systematic compilation, evaluation, documen

tation, and communication of relevant risks. Thus it is an

essential component of the company’s system for early risk

recognition in accordance with section 91 (2) of the

German Stock Corporation Act. This system was voluntarily

examined by the auditor.

The audit deemed the system capable of recognizing

risks that can endanger the existence of the company at an

early stage.

Risks that are identified are evaluated in a uniform way.

Socalled evaluated risks are assessed based on the proba

bility of its occurring and the potential damages. Individual


Thus, our most important individual market currently

accounts for only roughly 20 % of total Group sales. The

distribution of our business activities in the core regions

of Europe, Asia, and the Americas also has a balanced struc

ture.

At the same time, we continually update our appraisal

of the regional economic development in our internal report

ing system to be able to react to foreseeable effects by

controlling our procurement, production, and sales activities.

We react to longterm shifts in regional economic

performance by adjusting our sales and local production and

organizational structures.

In addition to general economic risks, there are market

related sales risks concerning individual product groups or

application areas. Particularly medium to longterm trends

that structurally lead to a decrease in demand in our target

markets can mean that we will not achieve our growth and

profitability targets. We try to control industryrelated

sales risks by broadly diversifying our offer. We supply many

different industries, which in turn sell their end products

in various markets. Therefore, our dependence on the under

lying consumer segments is limited. We estimate that

no single consumer segment (e.g. the automotive industry)

accounts for more than 20 % of our sales.

The analysis of our industryspecific and applicationre

lated sales is a component of our annual strategy process.

In addition, we examine changes in future growth potential

arising from demand trends and technological develop

ments, and adjust our strategic orientation in the divisions if

necessary.

The occurrence of a global economic crisis or the

emergence of regional economic crises are two significant

economic and industry risks that are rated as “very high”

or “high” risks. In the 2018 fiscal year, we assessed the prob

ability of these two risks occurring as being higher due

to the slowdown in growth and the deterioration of the out

look regarding the development of the economy. Since a

subdued market development was already taken into account

in our mediumterm financial planning, our assessment of

the potential losses compared to the previous year decreased

slightly. The evaluated risk of the two individual risks occur

ring was higher than in the previous year.

Sales Risks

Sales risks result mainly from intensified competition or shifts

in customer structure. They include sales risks for individual

products or product groups due to specific demand trends.

This can lead to decreasing sales revenues, which can

be caused by declining sales volumes or falling prices. Since

in many cases we cannot adjust the cost structure in the

short term, this can lead to a drop in profitability.

We counter sales risks by continually optimizing our

product and service portfolio, above all on the basis of our

innovative ability. In the process, it is decisive that we coop

erate closely with our customers at an early stage of devel

opment work to adapt to market needs. With our innova

tion strategy, we can counter increased competition in our

markets.

A loss of, mergers of, or backward integration of cus

tomers can lead to major changes in the customer structure.

Due to our very diversified customer structure, however,

these risks are limited. In addition, we cooperate closely with

our core customers within the framework of our key

account management.

The group of sales risks is assessed as being “medium.”

In the year under review, we only slightly changed our

assessment of the probability of occurrence and loss potential

from sales risks.

Risks from Business Combinations and Investments

Apart from operating growth, acquisitions of companies,

business activities, and individual technologies play a

74 Expected Developments

probability of occurrence and greater potential losses due to

price movements and limited availabilities, the group of

procurement risks is now assessed as a medium risk.

Financial Market Risks

Financial market risks primarily concern shortterm and sig

nificant changes in exchangerate relations and interest

rates, as well as default risks and the covering of financial

resource needs.

Due to exchangerate fluctuations, the translation of

foreign currency positions into the Group currency, the euro,

can have a negative effect on the Group’s sales and earn

ings performance (translation risks). Such negative effects can

also result from business conducted in a foreign currency

(transaction risks). As in the previous year, we categorize trans

lation risk as being a medium risk. Interestrate changes

influence financing costs. Defaults on trade accounts receiv

able or financial receivables can also have a negative effect

on the Group’s earnings situation and its financial resources.

If there is a lack of availability of financial resources for

the implementation of acquisitions or major investment proj

ects, we might not reach our strategic targets.

We safeguard against material transaction risks by con

cluding forward foreignexchange contracts in cases where

we assume that the underlying business can be realized with

a sufficient degree of certainty. The total amount expected

is safeguarded in different tranches to offset shortterm ex

change rate fluctuations.

More information on our evaluation and accounting

procedures for hedges can be found in the online Consoli

dated Financial Statements on page 55 ff. (note 28).

To minimize credit default risks, we systematically

examine the credit rating and payment behavior of our coun

terparties. The latter include customers, the banks we do

business with, and other business partners where payment

default can have an influence on our financial situation.

key role for the implementation of the strategy for profit

able growth at ALTANA. Depending on the size of the

activities acquired, inadequate integration can place a burden

on the Group’s earnings situation and limit its financial

headroom. In addition, a business performance that is worse

than what was expected when the acquisition was made

can lead to impairments of assets with a negative impact on

earnings.

To minimize the effects of the risks from business com

binations, we examine our acquisition targets systemati

cally and comprehensively and analyze them in detail in a

multistage approval process.

In 2018, we assessed the risk of impairments of assets

from acquisitions, which we classify as a medium risk, as

being higher than in the previous year. This resulted from a

higher probability of this risk occurring coupled with the

same assessment of potential losses.

Procurement Risks

Limited availability of certain raw materials or substantial raw

materials price increases that we cannot or can only par

tially pass on to the markets in the short term constitute the

primary procurement risks. These can have a negative im

pact on the Group’s earnings situation.

We continually analyze the situation on the rawmate

rials markets that are relevant for ALTANA. By doing so,

we can identify price trends and structural shifts on the part

of suppliers at an early stage and devise suitable measures.

We take this knowledge into account when we arrange sup

ply contracts. In addition, we take account of the volatility

of rawmaterials prices in our customer relations. To be able

to pass on price increases to the markets in the short term,

we use the flexibility of price mechanisms and price lockup

periods.

Our assessment regarding procurement risks changed

significantly in the course of the year. Due to the higher


We safeguard availability of financial resources through

central control and monitoring of our Groupwide financial

resources. In addition, by utilizing various financing instru

ments, we centrally provide a financial resources framework

that covers mediumterm needs going beyond the planned

financial cash inflow from our operating business.

Our assessment of financial market risks is nearly un

changed visàvis the previous year. We evaluate the most im

portant individual risk in this risk group, namely negative

effects on earnings from exchangerate changes, as having

a slightly higher probability of occurrence and at the same

time a slightly lower potential to lead to losses. Continued

high cash inflows from operating business activity and

the existing general financial resources framework continue

to suffice to cover the expected cash outflows for invest

ments, repayments, and dividends.

Innovation Risks

ALTANA’s position as an innovation and technology leader is

a major success factor for the company. It is important

for a supplier of highly specialized chemical products to con

tinually introduce new products on the market and to be

perceived by our customers as a competent and innovative

partner. If this was no longer the case in the future, risks

could result for our sustainable growth, the attainment of our

profitability targets, and ALTANA’s positioning in the rele

vant markets. The same applies if competitors patent know

how that we use but have not protected, as we would

then no longer be able to use it, or only at additional cost.

With our innovation culture, which is put into prac

tice at all levels of our organization, we highlight the impor

tance of innovation and safeguard its status. Both at a

decentralized and a Group level, we continually evaluate and

control our research and development activities based on

financial and nonfinancial criteria. By investing aboveaver

age amounts in research and development and focusing

on product adjustments and new developments, we can con

tinually introduce products on the market that are tailored

to customers’ individual and current needs and thus height

en our competitive edge.

It is important to protect knowhow we develop with pat

ents to convert our knowledge edge into economic success.

This includes safeguarding technologies as well as methods

and product properties we currently use so that other com

panies cannot patent them.

In 2018, there was no significant change in our assess

ment of innovation risks in comparison to the previous year.

Other Risks

Production risks concern technical disruptions or human fail

ure in production that can be harmful to people or the

environment. Our goal is to minimize the effects of machine

failure on the value chain by operating production lines

independently from one another. It is compulsory for our staff

to receive training in the clearly defined process and quality

standards in the areas in question. In addition, we conclude

property damage as well as plant and equipment break

down insurances.

Information technologies form the basis of nearly all

of ALTANA’s business and communications processes. Break

downs or other disruptions of IT systems can lead to far

reaching impairments in all of the Group’s valueadded stag

es, which can have significant effects on business perfor

mance (IT risks). In addition, potential risks arise from data

loss or theft of business secrets. ALTANA attaches great

importance to smooth availability of IT applications and ser

vices. To guarantee this, corresponding processes and

organizational structures have been established. Emergency

plans are in place in case of significant disruptions or losses

of data.

Delivery of faulty products can cause damage to peo

ple, property, or the environment and thus cause liability

risks. This can have significant effects on the Group’s asset

situation. We minimize this risk by standardizing produc


of the United Kingdom does not pose any risks that would

necessitate a revaluation of the Group’s assets to a sig

nificant extent.

Legal violations (compliance risks) can give rise to liability

risks or tarnish our reputation, which can have a signifi

cant effect on the Group’s earnings and asset situation. We

counter these risks within the framework of our compli

ance management system, inter alia by regularly informing

and training our employees about relevant legal require

ments.

An important basis for longterm success are compe

tent and committed employees. Should we no longer be able

to recruit or retain suitable specialists or managers in the

future, risks could arise for the successful implementation

of our strategy (personnel risks). To counter these risks,

ALTANA offers a sophisticated work environment and an at

tractive compensation system, which is supplemented by

various pension plans and wealth creation schemes. More

over, we regularly offer further education and training

programs to budding junior staff members, as well as to spe

cialized and managerial staff.

Compliant Group Accounting

Essential accountingrelated risks arise particularly when

extraordinary or nonroutine issues are handled. These include

the firsttime consolidation of acquired businesses or parts

of companies as well as the recording of the sale of Group

assets. Accounting of financial instruments is also subject

to risks due to the complex evaluation structure. Risks also

arise from fraudulent acts.

At ALTANA, a separate department of the Group’s hold

ing company coordinates and monitors Group accounting.

A core component of the control system are the guidelines,

process descriptions, and deadlines that this department

defines centrally for all companies, guaranteeing a standard

ized procedure for preparing the financial statements. For

complex issues, the instruments needed for uniform account

tion processes to a large extent and by taking comprehensive

qualitycontrol measures. In addition, we continually con

duct analyses to assess the hazardous potential of our input

materials and products, and we conclude insurances.

Changes in political and regulatory framework condi

tions can lead to restrictions on trade or foreignexchange

transactions. Due to political unrest, it can be more difficult

or even impossible to access the Group’s assets in the

country or countries in question. On account of regulatory

adjustments, it might no longer be possible to process or

sell certain products or ingredients, or only with strong restric

tions. We continually examine the political environment in

the countries important for us and take current tendencies

into account when evaluating business relationships. We

only make direct investments in countries in which we assume

the political environment is highly stable. We actively take

part in legislative procedures and discussions focusing on

changes in the regulatory environment. As a result, we

can anticipate possible new requirements early on.

In the past fiscal year, risks resulting from changed politi

cal and regulatory framework conditions increased due

to the steadily growing probability of higher customs duties

and more stringent trade restrictions.

A possible unregulated exit of the United Kingdom from

the European Union does not pose a significant risk to

ALTANA. Potential shortterm burdens on earnings can result

from higher customs duties and increased administrative

expenses for imports and exports, whose effects, however,

are limited due to the fact that an absolute increase would

be on a low level. In addition, the availability of raw materi

als can be restricted due to the elimination of REACH

certifications for products that have so far only been regis

tered in the United Kingdom. All of the Group’s divisions

have carried out an audit of an unregulated exit from their

respective supply flows and, if needed, introduced mea

sures to increase stocks of raw materials or finished products

or to minimize delivery bottlenecks. An unregulated exit


ing are retained centrally for all Group companies. For

recording extraordinary processes and complex special issues,

we regularly obtain external reports, advice, and state

ments.

The financial statements of the individual Group compa

nies are prepared decentrally by the local accounting de

partments. Hence the individual companies are responsible

for preparing the financial statements, in keeping with

Group guidelines and countryspecific statutory accounting

requirements.

The work steps needed to prepare the financial state

ments are defined such that important process controls

are integrated. These include guidelines pertaining to the

separation of functions and allocation of responsibilities,

to control mechanisms, and to IT system access regulations.

The respective management explicitly confirms to the

Group’s management that the annual financial statements

are correct and complete. In addition, important financial

statements are audited by the company or Group auditors

in charge.

The local financial statements are recorded and con

solidated via standardized formats and processes in a cen

tral IT system. At the divisional and holding company levels

numerous manual and ITassisted control mechanisms are

applied. They encompass an analysis and a plausibility exam

ination of the registered data and the consolidated results

by Group accounting as well as by the controlling depart

ment and other departments with expertise in this area.

Required corrections of the information in the financial state

ments are generally made at the level of the individual

company to ensure the data are uniform and are transferred.

The company auditor and the Group auditor examine

issues, processes, and control systems relevant for the gener

ation of financial statements. The Group auditor reports

on the audit directly to the Supervisory Board and the Audit

Committee. In certain cases, audits are carried out by the

central Internal Audit department.

After each process related to the preparation of the

financial statements, optimization potential identified at the

different levels is analyzed and necessary adjustments

of the processes are made.

Opportunities

The identification and evaluation of opportunities for our

future business development is integrated into the different

planning, analysis, and control processes.

Within the framework of strategic planning, we analyze

demand trends as well as market and technology devel

opments with regard to options for action that could enable

ALTANA to create value. In addition, the divisions contin

ually examine possibilities of developing new sales markets.

During the financialplanning process, the effects of action

options are evaluated and discussed so that we can optimally

exploit future opportunities. Finally, possible opportunities for

shortterm business development, along with the attendant

risks, are dealt with in detail at all levels of management.

Below, major opportunities are described that could lead

to ALTANA’s surpassing its short, medium, or longterm

goals. The order corresponds to our assessment of the effects

on our business performance.

Economic and Industry Development

Should the economic environment in the established indus

trial regions important for ALTANA, particularly in the U.S.,

China, and Europe, develop better than we anticipated, un

expected growth impetus could arise. As a result, demand

for our products and services could develop more positively

and exceed our forecast. The same applies to growth in

the important emerging countries in Asia and South America.

If the growth rates in these nations were higher than

expected, we might be able to benefit from this to a dispro

portionately high extent due to our market positions.


In addition to regional factors, growth impetus can also

result from individual branches of industry. Further potential

could be opened up, in particular, if the automotive sector

and the construction industry showed a positive development,

or if there was a trend reversal concerning the use of silver

and gray colors in the consumer sector.

Innovation

We have to continually streamline our product and service

portfolio to be able to continue to pursue our strategy for

profitable growth in the long term. Should ALTANA manage

to enhance its innovativeness more quickly than expected

or to increase its share of new products for which there is a

high demand beyond the target level, there would be even

better prospects for growth. The same applies if we entered

new markets or opened up new application fields for our

products.

Business Combina tions and Portfolio Measures

Acquisitions play a key role in ALTANA’s longterm value cre

ation. In recent years, we have continually advanced the

Group strategically due to acquisitions. At the same time, we

cleansed our portfolio of those activities that were not

in line with our strategic aims and for which there were no

longterm valuecreation perspectives within the Group.

In the future, we intend to continue to boost our growth

by acquiring businesses and activities. This is an essential

prerequisite for us to achieve our strategic growth targets.

Should opportunities arise in the future that exceed our

expectations, these new activities could help us strengthen

our market positions and open up new market segments.

This, in turn, could help us achieve our strategic targets more

quickly.

Synergies

The ALTANA Group is decentralized to a large extent. Still,

in some areas of the valuecreation chain and in certain

management functions, central units support the divisions

and play a coordinating role. To the extent that we man

age to push forward the networks within the Group more

strongly than expected, this may spawn further potential

to improve efficiency.

The Management Board’s Overall Statement on the Anticipated Development of the Group Including Its Overall View of the Risk and Opportunity Situation

In 2019, we expect the deterioration of the economic framework

conditions and the increasing uncertainty about the macro

economic situation to continue. In this environment, we expect

ALTANA to achieve operating sales growth of 1 % to 5 %,

with earnings profitability remaining roughly at the previous year’s

level. The key performance indicators for valueoriented

management should improve slightly compared to the preced

ing fiscal year.

We believe that the risk of burdens from a development of the

global economy that is worse than we expected or even reces

sive, or in important core regions, continues to exist. In addition,

considerable risks to our shortterm sales and earnings perfor

mance are posed by the higher price volatility on the rawmateri

als markets, by impairments for intangible assets acquired

within the framework of acquisitions, and by shortterm exchange

rate fluctuations.

Overall, we have not found any risks that could endanger the

continued existence of the company. The risks we face are set

against opportunities that could enable us to achieve sales and

earnings performance surpassing our forecasts.


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Sustainable Product Strategy

Products Promoting Climate Protection

Sustainable Effects for Customers

Replacement of Critical Substances

Products from Renewable and Recycled Raw Materials

Products

Our innovative products contribute to conserving resources and protecting the environment. At the same time, we help our clients manufacture with low emissions and energy- efficiently, and assist them in enhancing the safety of their products.

Sustainable Product Strategy

ALTANA offers companies around the world specialty chemi-

cal solutions that make products used in daily life better

and more sustainable. We convince our customers with added

value and give them a competitive edge through our work.

Some solutions improve, for example, the functions of end

products and increase their shelf life. Others optimize our

customers’ value chain in terms of energy and resource con-

sumption. And still others enable our customers to reduce

the amount of critical substances in their end products or to

replace them with less critical ones. Innovative, environ-

mentally friendly, safely processable products play a key role.

They help ALTANA’s customers implement their own sus-

tainability concepts. Based on this understanding of sustain-

ability, the Group continuously leverages new fields of

business and paves the way for further profitable growth.

Due to their strong customer orientation, many

ALTANA companies gear their innovation strategies system-

atically to a catalog of sustainability criteria at a very

early stage of product development. This includes responsible

handling of resources (water, energy, and raw materials)

as well as the goal of developing products whose effects on

the environment are as low as possible without detracting

from the product’s function. This is reflected by the increasing

number of coatings, additives, and pigment formulations

that are conceived for water-based applications and do not

need organic solvents.

Another aim of ALTANA’s product strategy is to replace

critical components with less critical ones whenever pos-

sible. For products that need classifications due to national or

international hazardous substance regulations, ALTANA’s

companies have special data sheets on hand that provide

consumers with important information on safe storage

and further processing. Moreover, certified lifecycle analyses

are available for certain products.

The Keep Changing Agenda for the future supports the

ALTANA Group’s sustainability strategy, among other things.

A central action field of the future agenda is “Take the

lead in sustainability.” To achieve this goal, new criteria were

defined in purchasing, research and development, M&A,

investment-related activities, and in the initiative to improve

corporate processes, called ALTANA Excellence, in order to

address ecological and social aspects in addition to economic

ones.

Products Promoting Climate Protection

The trend toward usage of water-based coatings and resin

systems continued in the period under review. Legal regula-

tions, for example the restriction on organic solvent-con-

taining coatings in China, and customer requirements have

led to a growing demand for water-based products.

A good example are the activities of ALTANA’s largest

division, BYK, which recognized this development at an

early stage and in the last five years has developed and mar-

keted more than 30 new products for water-based systems.

The additives and instruments specialist achieves more than

40 percent of its sales alone with wetting and dispersing

additives, defoamers, and water-based rheology additives.

An exemplary product is the recently introduced VOC-free

defoamer BYK-1786 for aqueous systems used to remove

microfoam. This defoamer has a wide range of applica-

tions and is particularly suitable for environmentally friendly

architectural and general industrial coatings. In general,

BYK is relying on aqueous systems as a future technology.

Water-based coatings are topical alternatives to conven-

tional systems. In most cases they perform just as well and

are as easy to process, while being profitable and envi-

ronmentally sound at the same time.


under development, and the first commercial products are

expected in the coming years.

In the packaging coatings sector, mercury vapor lamps

and LED lights are used to cure certain coating systems.

The latter have clear advantages: longer runtimes, consistent

quality, lower energy needs, less heat generation, and

avoidance of dangerous mercury. Legal requirements restrict

the use of mercury vapor lamps in Europe. For curing

with LED lighting systems, ACTEGA has successfully devel-

oped suitable printing inks and coatings and established

them on the market.

Replacement of Critical Substances

In the year under review, ALTANA succeeded in replacing

further critical substances. For example, at BYK a solvent

was replaced whose use hitherto was drastically limited

by export regulations. An alternative solvent combination

was found that leaves the product properties unchanged.

The substitution of N-Methyl-2-pyrrolidone (NMP), clas-

sified as a reprotoxic substance, was pushed forward in

several projects. For instance, new formulations of wax dis-

persions could be developed without NMP.

At ECKART, the effect-pigment specialist, a group of

emulsifiers was replaced whose use has been restricted

increasingly within the EU in recent years due to the toxi-

cological effect of its degradation products on water or-

ganisms. As an alternative, ECKART developed metallic pig-

ments for environmentally friendly aqueous uses on a

different raw-material basis and introduced them on the

market.

At ACTEGA, adhesives for the PROVALIN product

family were developed without Bisphenol A. In addition,

these products are free of PVC plastisols and plasticizers

suspected of having negative effects on health.

ELANTAS is also continually developing new products with

improved environmental properties. The focus is on low-

emission water-based systems. A challenge in the develop-

ment of organic solvent-free technologies is the preserva-

tion or improvement of the product characteristics and the

performance features. Therefore, the rheological proper-

ties of water-based systems can be optimized and thinner

films can be achieved with the same or better efficiency.

With the product ELAN-Guard 6965, an impregnat ing resin

for electric motors, for example, this is achieved through

special emulsion manufacturing processes.

In the period under review, ACTEGA Rhenania developed

and marketed new water-based products with significant-

ly lower emissions. These products are used in packaging for

animal feed products, among others.

Sustainable Effects for Customers

ALTANA products can simplify our customers’ manufacturing

processes and simultaneously significantly improve the

products’ properties. Both effects not only have economic

advantages, but also have a positive impact on the envi-

ronment.

ELANTAS’ rapidly hardening impregnating resins, for

example, make a lasting contribution. Through the use

of this technology both the electricity consumption and the

time needed for impregnating low-voltage motors can be

reduced significantly. Furthermore, through targeted adjust-

ment of the flow properties the use of solvents can be

largely avoided, contributing to occupational safety, sustain-

ability, and cost reduction.

With a focus on using resources more efficiently,

ACTEGA acquired a technology for a new label printing pro-

cess. One advantage is that printing can be carried out

with significantly less waste. This technology is currently

82 Products

Products from Renewable and Recycled Raw Materials

In the year under review, ELANTAS Beck developed a

hardener for epoxy systems obtained from the shells of

cashew nuts, a raw material that is amply available in

India and has no other use (for example, as a foodstuff).

Also, the manufacture of this hardener is more energy-

efficient and waste-neutral than classical chemical manufac-

turing processes using fossil sources.

An example of the usage of a recycled raw material

is the use of purified polyethylene terephthalate (PET) for

the manufacture of a wire enamel. This process leads to

sig nificantly reduced energy consumption and lower waste

volumes.


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A Focus on Occupational Safety

Incidents in Detail

Worldwide Safety Measures

A Focus on Safety Communication

Health Protection

Safety and Health

ALTANA relies on a uniform safety culture. Various technical and organizational measures as well as training programs contribute to enhancing work safety and anchoring the issue firmly in our employees’ minds. Our top priority is to reduce the number of accidents. We are constantly working on minimizing hazards and improving the protection of our employees’ health.

A Focus on Occupational Safety

For ALTANA, the health and safety of employees is its top

priority. Various technical and organizational measures that we

implement to protect employees from hazards according

to the respective sites’ production conditions as well as to the

laws and regulations are in effect at each location. ALTANA

also relies on training and other measures to achieve a uni-

form safety culture.

Since 2007, ALTANA has used the Work Accident Indica-

tor (WAI) as the most important key performance indicator

in order to observe the occupational safety at all sites and to

improve it. The indicator provides the number of occu-

pational accidents and lost work days and sets them in rela-

tion to the total working hours. On the basis of these data,

ALTANA’s Management Board and the EH&S department de-

fine three WAI values each year as targets that apply to all

of the companies in the ALTANA Group.

In 2018, as in the previous years, there were no fatal

accidents. Some sites have achieved remarkable occupational-

safety results. For instance, BYK Tongling and ELANTAS

Beck India at the Ankleshwar and Pimpri sites have not re-

corded any lost work time due to accidents for more than

ten years. The following sites have been accident-free for

more than six years: ECKART Zhuhai (eight years), ACTEGA

Rhenacoat and ELANTAS Tongling (each seven years), and

ACTEGA Foshan (six years).

Overall, ALTANA improved all of its occupational-safety

key performance indicators (WAI 1, WAI 2, and WAI 3)

compared to the previous year, but only partially achieved

the targets it set itself in the year under review. Progress

was made particularly regarding accidents with longer-term

lost work time. Analyses of the accidents show that while

some have technical and organizational causes, most have be-

havior-based causes.

To further improve this result, ALTANA will focus more

on safety culture in the future. In addition to the further

development of technical and organizational measures,

behavior-based safety training serves to sharpen employees’

awareness of safety issues and train them to act safely

100 percent of the time.

In addition, ALTANA published a newsletter titled

SAFETY @ ALTANA for the first time in 2018 and distributed it

WAI 1 (number of occupational accidents with lost work time of one day or more per million working hours)

2015 4.73

2016 3.94

2017 4.01

2018 3.67

(Target 2019: 3.00)

WAI 2 (number of occupational accidents with lost work time of more than three days per million working hours)

2015 3.22

2016 2.52

2017 3.06

2018 2.69

(Target 2019: 2.10)

WAI 3 (number of lost work days due to occupational accidents per million working hours)

2015 57.04

2016 38.21

2017 54.58

2018 36.45

(Target 2019: 40.00)

Target 2018: 3.00

Target 2018: 2.10

Target 2018: 40.00


The company suggestion scheme (CSS) continues to play a

key role in the improvement of ALTANA’s safety culture.

More than 200 ideas concerned the subject of “Improvement

of safety at the workplace and of health protection.” The

suggestions that were implemented not only helped improve

ergonomic conditions and occupational safety but also

helped cut costs.

A Focus on Safety Communication

To continue to sharpen safety awareness in the long term,

the ALTANA Group primarily relies on targeted communica-

tion.

Last year, BYK in Germany signed a multiyear coopera-

tion agreement with the employer’s liability insurance asso-

ciation of raw materials and chemical industry (BG RCI) titled

“VISION ZERO. Zero Accidents – Healthy Work!” Accompa-

nying this, the safety campaign “Together. For Safety. VISION

ZERO” was launched in 2018. In this context, all manag-

ers attended a one-day workshop at which the seven VISION

ZERO success factors were explained. For example, the

success factor “Danger recognized – danger banned” was

elucidated in detail. Within the framework of the coopera-

tion, every year measures are jointly defined and implement-

ed in practice.

At the ACTEGA site in Grevenbroich, a special kind of

coaching on the topic of “Behavior-based safety culture” was

carried out with an external partner. The aim of this con-

cept is to bring about a lasting change in employees’ safety

awareness. In addition to other issues, the focus was on

the topic of “self-motivated and self-dependent action.” Given

the very positive response, we will carry out this type of

coaching or comparable kinds at other sites as well, in order

to continuously improve employees’ safety behavior there.

to all its worldwide sites. In the newsletter, accidents with

significant frequency and relevance, for example stumbling,

slipping, and falling are addressed and recommended ac-

tions are provided. Furthermore, ALTANA’s staff magazine

regularly discusses special accidents and strategies for

avoiding them. Moreover, all sites have established efficient

processes for prompt analyses of accidents in which em-

ployees and managers are involved.

Incidents in Detail

Based on the instructions for reporting on globally harmo-

nized process safety key figures in accordance with the Inter-

national Council of Chemical Associations (ICCA) and on

the definition provided by the German Chemical Industry As-

sociation (VCI), we had a total of eleven significant inci-

dents in 2018 (previous year: 12). No employees were injured.

The eleven incidents were releases of chemicals. They did

not have negative effects on the environment. There were no

fires or explosions in the period under review.

Worldwide Safety Measures

At most sites, a safety week is held on an annual basis. All

employees at the respective sites are invited to engage

with the issue of safety within the framework of seminars and

presentations. For example, special safety trainings were

carried out at different sites of ELANTAS Europe, at ACTEGA

North America, and at ACTEGA do Brasil.

To avoid accidents with forklifts, some sites have

equipped their vehicles with so-called blue lights. The lights,

mounted on the front and back of the vehicles, cast a

bright blue spot on the ground, enabling pedestrians and

other drivers of vehicles to see the forklift from a distance,

especially in areas with poor visibility.

86 Safety and Health

Health Protection

To improve health protection, investments were made to re-

duce volatile organic compounds (VOCs) in the room air

of production buildings. BYK in Kempen, the ELANTAS sites

in Hamburg, Quattordio, and Zhuhai, ACTEGA in Foshan,

and ECKART in Güntersthal made great progress in this en-

deavor in the year under review. With the help of closed

systems, optimized exhaust systems, and automation mea-

sures the corresponding emissions were reduced consider-

ably.

Ergonomic conditions were improved at a number of

sites. For instance, loading and lifting facilities for various work

processes involving heavy containers and apparatus were

set up at the ECKART sites in Painesville, Louisville, Pori, and

Güntersthal, as well as at the ELANTAS site in Quattordio.

As a result, manual activities were reduced and musculoskel-

etal disorders minimized.

At many sites around the world, annual health days

have been established, on which employees can get medical

checkups and obtain information about healthy nutrition.

For example, the ELANTAS site in Hamburg offers employees

additionally cardiovascular and thyroid examinations.

Moreover, employees around the world have access

to a manifold sports, nutrition, fitness, and relaxation offer,

which at many sites is available all year round.


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Improvements in Environmental Performance

Progress in Climate Protection

Responsible Usage of the Resource Water

Further Waste Management Improvement

Emissions Reduced Further

Environment

Environmentally friendly management is a key compo-nent of ALTANA’s corporate strategy. Our goal is to steadily reduce the energy consumption at all sites and in all areas. We also implement this objective in other environmentally relevant areas, such as waste and the consumption of drinking water.

Improvements in Environmental Performance

ALTANA controls the Group’s environmental protection per-

formance with the help of self-defined key performance

indicators that set the company’s energy and resource con-

sumption in relation to gross value added. ALTANA speci-

fies upper limits for energy and resources consumption for

each calendar year. The data on CO² emissions, water con-

sumption, and waste volumes, which have been collected

since 2007, document the Group’s continuous progress.

In the 2018 fiscal year, the ALTANA Group’s energy con-

sumption amounted to around 708,000 megawatt-hours

after 697,200 megawatt-hours in the previous year. The spe-

cialty chemicals company had already reached its long-term

goal of reducing its specific CO² emissions related to gross

value added from 2007 to 2020 by 30 % to 0.21 kg / €

in the previous year. This aim was achieved through the selec-

tion of electricity providers. Nearly all of our German sites

now obtain around half of their electricity, currently amount-

ing to 280 g / kWh, from renewable energy sources. In

addition, projects to improve energy efficiency are imple-

mented at various sites. For example, another solar facility

went into operation, increasing the amount of electricity from

regenerative sources (see next page). As a result, specific

CO² emissions related to finished goods produced were cut

from 0.35 kg / kg in the previous year to 0.34 kg / kg (a re-

duction of 3 %).

In 2018, the ALTANA Group reduced the volume of

hazardous waste it produced from 19,300 tons (in the pre-

vious year) to 18,800 tons, although the production vol-

ume increased in the year under review. The key performance

indicator in relation to gross value added also improved,

from 21.24 g / € (in the previous year) to 20.27 g / €. The

amount of non-hazardous waste also decreased in ab-

solute terms, from around 11,700 to 11,400 tons. The key

performance indicators related to gross value added and

produced finished goods also showed a positive trend (details

can be found in the online document “Facts and Figures

on Sustainability 2018”). The reasons for the improvement

of the waste volume record include optimizations of pro-

duction processes and reuse of byproducts.

In terms of water consumption, ALTANA could not

achieve its target in 2018. The company’s drinking water

consumption was above the upper limit set internally for

the year, increasing to around 1,370,000 cubic meters. This

was due among other things to temporary technical distur-

bances.

In the period under review, ALTANA increased its pro-

duction of finished goods to 562,600 tons, needing 545,400

tons of raw material. Of the latter amount, 418,100 tons

were fossil raw materials, 25,500 tons renewable raw mate-

rials, and 101,800 tons non-fossil and non-renewable raw

materials. 47,100 tons of water were also used as raw mate-

rial. Detailed information on ALTANA’s resource and energy

consumption (differentiated based on electricity, natural gas,

and oil) and on ALTANA’s environmental key performance

indicators can be found in the document at www.altana.

com/facts_figures_sustainability_2018.

Again in 2018, 81 % of the Group’s manufacturing

sites fulfilled the ISO 14001 standard. In addition, the

energy management systems of ten sites are certified in

accordance with ISO 50001.

Progress in Climate Protection

Within the framework of the Keep Changing Agenda, nu-

merous lighthouse projects were identified that can push

forward sustainability at ALTANA. Of the 26 projects submit-

ted, 16 were selected to be implemented with a higher

priority. 14 of the projects selected concern the optimization

of energy efficiency, one project supports waste reduction,


and another project deals with the issue of lifecycle assess-

ment. By improving its energy efficiency, the ALTANA Group

consumes less electricity and reduces CO² emissions.

One lighthouse project, for example, seeks to optimize

the drying of the product Laponite. At its Widnes site in

Great Britain, BYK aims to improve energy efficiency through

lower steam consumption, to reduce the waste volume,

and to create better working conditions by reducing the tem-

perature of the ambient air. With this measure BYK already

saved 1,240 megawatt-hours (corresponding to 230 tons of

CO²) in the year under review.

Another example is the modernization of boilers at

several sites. For many chemical processes, steam is needed

for heating. This steam is produced in boilers and distrib-

uted through a pipe system. Modern heating boiler systems

are equipped with efficient and low-emission gas burners,

exhaust heat recovery systems, and highly effective control

technology. For example, at its U.S. site in Gonzales, BYK

saved around 13,350 megawatt-hours thanks to this mod-

ernization. CO² emissions were cut by nearly 2,900 tons.

ALTANA also made further investments to upgrade to

more energy-efficient LED lighting. At a total of eleven sites

of the four divisions, electricity-saving LED lighting was in-

stalled. With this measure, the ALTANA Group was able to

save more than 1,460 megawatt-hours and reduce CO²

emissions by 620 tons.

Our Moosburg site is also contributing to environmental

protection. BYK is using warm wastewater to generate en-

ergy there. Heat from around 30,000 m³ of wastewater with

a temperature of 70 °C is fed back into the production

process through a heat exchanger. As a result, around 1,180

megawatt-hours could be saved, meaning a reduction of

approximately 340 tons of CO².

In addition to the existing solar plants at ELANTAS in As-

coli Piceno, Italy, and in the Netherlands at BYK in Deventer,

this year an additional photovoltaic facility went into oper-

ation at ELANTAS’ site in Pune, India. On the factory

grounds a total of 804 panels with a maximum output of

250 kW were installed in a space of around 3,500 m².

The panels can generate approximately 400,000 kWh of en-

ergy a year, accounting for about half of the electricity

needs of the new research center and administrative build-

ing at the site.

Environmental performance indicators ALTANA

2015 2016 2017 2018

CO² (Scope 1 + Scope 2) (kg / € ) 0.27 0.24 0.21 0.21

Drinking water (l / € ) 1.87 1.52 1.36 1.48

Hazardous waste (g / € ) 23.57 23.33 21.24 20.27

Hazardous waste for disposal (g / € ) 6.92 7.04 4.20 3.73

Non-hazardous waste (g / € ) 13.22 10.49 12.89 12.26

Non-hazardous waste for disposal (g / € ) 6.36 5.16 5.62 5.67

The key performance indicators are calculated from the absolute values related to the gross value added.

Scope 1: direct emissions; Scope 2: indirect emissions

90 Environment

Responsible Usage of the Resource Water

Water plays an important role in many of the ALTANA Group’s

production processes, and so the specialty chemicals group

is making various efforts to deal sparingly with this resource.

Water is used in the chemical industry as a raw material,

as a cleaning agent, and as a coolant. ALTANA aims to keep

its water consumption as low as possible and to use it as

a cooling medium in closed loop systems.

At its Swiss site in Vétroz, ECKART is in a first step opti-

mizing control of the pump unit in an exemplary way, thus

reducing the amount of water used for cooling. As a conse-

quence, 3,000 m³ of groundwater can be saved. In a sec-

ond step, the cooling systems will be converted to closed

loop cooling systems.

At its Indian site in Ankleshwar, ELANTAS successfully

carried out a pilot project (“Zero Discharge”) aimed at

reducing the amount of wastewater significantly. The waste-

water is treated in several process steps, and in the end

less than 2 % of the initial volume has to be disposed of.

The largest share can be reused as water, say, for cooling

the production plant.

Further Waste Management Improvement

When it comes to waste management, ALTANA’s main

strategy is to avoid waste or reduce the amount of waste it

produces.

At BYK’s Kempen site a usage possibility was found

for a byproduct that until now had to be disposed of at great

cost. So far, this byproduct has been partially fed back into

the process, which, however, was very laborious and costly

due to the lower quality and the additional processing

time required. Now customers have been found that can

use this product for their processes with no further steps.

At ECKART’s U.S. site in Louisville, previously, aluminum

powder, which arises as waste during production and cannot

be reused by ECKART for quality reasons, was disposed

of as landfill waste. Now a recycling operation has been devel-

oped that melts this aluminum powder and enables it to

be recycled. As a result, 22.5 tons of landfill waste can be

avoided per year.

By optimizing its waste management at its U.S. site in

Wallingford, BYK increased the percentage of waste used

thermally from 52 % to 60 % and thus considerably reduced

the amount of waste for disposal.

Emissions Reduced Further

In addition to CO², which mainly arises during the combus-

tion of fossil fuels, volatile organic compounds (VOCs) also

contribute to emissions. ALTANA aims to continue keeping

these emissions as low as possible in the future. To achieve

this goal, various technical possibilities are available at many

sites, which will continue to be used and will be expanded

in the coming years.

Technical improvements, for example the installation of

an additional condensate cooler at a plant to recover sol-

vents at ELANTAS in Ankleshwar, also contribute to a signifi-

cant reduction of local emissions.

In a broader sense, ALTANA considers noise to be an

emission. At all sites measures are being taken to reduce

noise. At ACTEGA’s Grevenbroich site, highly efficient muf-

flers were installed in the ventilation systems, enabling

noise levels to be reduced from 82 dB (A) to 39 dB (A) per

ventilator.


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Our Employees: Our Most Important Asset

Human Resource Development and Talent Management

Women in Leadership Positions

Recruitment

Human Resources

ALTANA gears its activities to long-term and sustainable growth. We can only achieve this goal together with our competent and committed employees. We there-fore promote the professional development of our staff, prepare them for leadership positions, and enable them to participate in the company’s success. We put particular emphasis on the recruitment of young talent, specialists, and managers.

Our Employees: Our Most Important Asset

ALTANA is a highly innovative globally leading specialty chem-

icals company. Of overriding importance for the company’s

success is our most important resource, our employees, who

are motivated and dedicated and have above-average

qualifications. They are committed to the respectful corporate

culture defined in ALTANA’s Guiding Principles, which is

informed by our four central values: appreciation, openness,

empowerment to act, and trust.

As an attractive employer, we offer our some 6,400

employees around the world individualized further training

opportunities, promote their professional development

in a targeted manner, and support their health with special

preventive measures. Among the measures we offer are

many voluntary additional benefits. The success of our offer

is reflected by a survey conducted in 2018 at a few of

ALTANA’s German sites within the framework of a bachelor’s

thesis. Around one-fourth of the employees participated.

The survey participants were “completely satisfied” (40.5

percent) or “satisfied” (56.4 percent) with the additional

benefits offered. For most of the participants, the most im-

portant benefits are pension provision, Christmas and

vacation money, flextime and compensatory time off, profit

participation, and the cafeteria. Nearly 70 percent indicate

that no important benefits are missing at present.

Human Resource Development and Talent Management

To ensure that the company remains highly competitive in

globalized sales markets, a primary focus of the ALTANA

Group’s human resource strategy is to secure young talent.

Special emphasis is placed on consistent and global pro-

motion of internal talent. By 2020, we aim to fill around 70

percent of all management positions worldwide with

ALTANA staff. To this end, we are continuously improving our

human resource development programs. In the year un-

der review, we reworked our competence model. The model

helps us develop and recruit employees on the basis of

our corporate strategy and our growth targets. In addition,

the competence model provides us with orientation en-

abling us to determine competencies that our employees

already have when they join the company and ones we

have to (further) develop together with them.

In 2018, the Advanced Leadership Program (ALP) was

launched. With ALP the company’s leadership culture is

strengthened and networks between managers are intensi-

fied. Selected experienced managers with a great willing-

ness to change and high potential for taking more responsi-

bility (for example, globally or cross-divisionally) can take

part in this program. Twelve managers are already taking

advantage of the opportunities offered by ALP.

In the year under review, a globally oriented Manage-

ment Development Program (MDP) with six modules was

offered again. Seventeen participants from nine countries

participated. The program is geared to employees with a

strong willingness to change and high international mobility,

as well as potential for strategic positions. In the context

of MDP, they are intensively prepared for global leadership

roles and have the opportunity to be part of networks.

On a regional level, dp Europe was introduced in the year

under review. In the Regional Development Program (Re-

gional DP) fourteen participants are prepared for operating

and strategic functions. The months-long programs MDP

and Regional DP enable valuable networks within the ALTANA

Group for promoting exchange between regions and sub-

sidiaries.

Furthermore, we in the ALTANA Group carry out specially

developed dialogs with all employees on a regular basis.

They promote the employees’ professional development by

assessing their development. Within the framework of this

progress dialog carried out each year, the disciplinary super-


visor holds personal talks with each employee at least

once a year, which forms the basis for the respective target

agreement.

If a work contract specifies that the target agreements

impact the compensation of the employee in question,

the supervisor carries out a performance dialog in addition

to the objective-setting dialog. All of the dialog elements

together constitute the ALTANA compass dialog.

Women in Leadership Positions

Diversity in leadership positions is an important goal of our

Keep Changing Agenda. At the end of 2018, 30.2 percent

percent of our employees in Germany and 22.3 percent of

our managers there were women. ALTANA’s medium- to

long-term goal is to increase the share of women in leader-

ship positions to the percentage of women in the compa-

ny’s total workforce.

The initiative LEADING WOMEN @ ALTANA is providing

important impetus. It includes a mentoring program for

women that prepares women who have potential for a pos-

sible leadership role and accompanies women who have

taken on a leadership role for the first time. The mentoring

program makes an important contribution toward increas-

ing the share of women in leadership positions.

To this end, teams consisting of a mentee and a mentor

meet regularly over a period of twelve months. The mentor

shares his or her knowledge and experience with the mentee.

On account of the success, ALTANA continued the mentor-

ing project in 2018 with 19 new tandems across its sites in

Germany and is examining whether to roll out the project

Europe-wide.

Recruitment

Our recruitment activities received two awards in 2018.

ALTANA received top results regarding online recruiting chan-

nels from BEST RECRUITERS and the Potentialpark study.

BEST RECRUITERS gave us the Gold award in its ranking of

the chemical industry. In the overall ranking, which evalu-

ates the online recruiting qualities of companies in all sectors,

ALTANA finished in third place. The top 400 employees in

Austria, Germany, and Switzerland were examined.

In the 2018 Potentialpark study ranking, we also finished

in a top position (16th place again) and were awarded

as one of the “top 30 in Germany.”

For the recruitment of young talent, the ALTANA Group

has relied for years on cooperation with institutes of

higher education. The focus of ALTANA’s activities has been

extended from “chemistry” to IT courses of study. It pro-

motes, for example, projects and final theses at Rhine-Waal

and Niederrhein universities.

For the ninth time ALTANA supported students majoring

in chemistry, chemical and coatings engineering, business

informatics, human resource management, and mechanical

engineering with a Deutschlandstipendium schol arship. The

27 recipients not only received financial support, but could

also personally experience ALTANA within the framework

of various events, enable themselves to be considered for

internships and degree theses, take advantage of mentoring

offers or take part in specialist seminars.

Since mid-2018 ALTANA has partici pated in a program

called “Make Something Out of Your Studies” launched

by Niederrhein University. Students majoring in coatings tech-

nology or instrumental analytics who are accepted into

ALTANA’s program are given a realistic picture of jobs they

can pursue after they finish their studies. We started with

eight students.

94 Human Resources

Social Commitment

As a good corporate citizen, ALTANA supports and sponsors social projects focusing on education, science, and research. To strengthen our local environments and to be a good neighbor, we especially promote ini-tiatives near our sites in Germany and abroad.

Social Commitment

Educational Coaching of Elementary School Children

Junior Researchers Visit ALTANA

Youth Startups Competition

Open House Day

Social Engagement and Donations

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Social Commitment

The natural sciences, mathematics, informatics, and technol-

ogy are among the drivers of economic development and

social progress around the world. In this context, ALTANA

wants to help introduce young people to these disciplines

at an early stage and to kindle their enthusiasm for them. In

addition, ALTANA is involved in a number of selected so-

cial projects. In cooperation with experienced partners from

the education sector, we support concrete projects, often

in the immediate proximity of our sites. To maximize lasting

impact, the company usually promotes these projects over

a period of several years.

Educational Coaching of Elementary School Children

ALTANA supported the educational coaching project at GGS

Innenstadt, the largest public elementary school in Wesel,

for the fifth time in a row (see also page 42 ff.). The proj-

ect was initiated by the City of Wesel and implemented by

the Klausenhof Academy in close cooperation with GGS

Innenstadt. The main aim of the coaching is to promote

elementary school children and to achieve equal opportunity

for children with a migration background and from socially

deprived backgrounds. The project also supports the develop-

ment of children with special talents.

As in the previous years, ALTANA financed the personnel

and material costs for a socio-educational expert at the

Klausenhof Academy. The expert assigns a “personal men-

tor” to each child, trains the mentors, and coordinates

their work. A total of 35 children have been supported since

the project began in 2014. Currently, 18 children are as-

sisted and challenged on an individual basis by volunteer

mentors, who promote their personality development in

keeping with their interests and abilities. The support focus-

es on extracurricular activities such as library visits, music,

and sports.

Junior Researchers Visit ALTANA

Furthering children’s and adolescents’ scientific knowledge

has a tradition at ALTANA. Employees of BYK-Chemie at

our Wesel site have worked as school ambassadors for many

years. ALTANA is a network partner of the Germany-wide

foundation House of Junior Researchers. For a number of years

now, it has accompanied two elementary schools and one

daycare center in Wesel. The aim of the initiative, which is

sponsored by the German Federal Government, is to get

children interested in science. The concept includes special

research days that take place in cooperation with school

ambassadors at the respective school or daycare center. In

2018, water and communication were the main topics of

the research days. In March, the junior researchers presented

their results to parents, teachers, and employees at the tra-

ditional closing event held at the ALTANA conference center.

In the context of various events, employees at other

sites also give young people insight into the world of science,

conduct experiments together with them, and introduce

them to scientific training and career possibilities. In Walling-

ford, BYK USA took part in May in the Parker Farms

School Career Fair for third, fourth, and fifth graders. In Italy,

ELANTAS Europe employees thrilled the public with ex-

periments in September during the Night of Researchers, an

event series staged by the University of Parma.

Youth Startups Competition

ALTANA supports the online competition “Jugend gründet”

(Youth Startups), sponsored by the German Federal Govern-

ment, and in 2018 offered a special prize in chemistry for

96 Social Commitment

the third time. In the national finals in 2018, a team of stu-

dents from Nagold, Germany, won the prize for an inno-

vative business idea called GAIA, whereby a digitally controlled

system enables plants to be fertilized individually. The idea

is innovative because modern measuring devices are combined

with a watering system to optimally supply nutrients to dif-

ferent plants. The award included a four-day trip to the East

Coast of the U.S., where the students visited one of the

ALTANA Group’s largest research and manufacturing sites at

BYK USA in Wallingford in August 2018.

Open House Day

At various sites, ALTANA participated in the Germany-wide

Open House Day of the Chemical Industry, hosted by almost

200 chemical companies and seven universities, on Sep-

tember 22, 2018. Around 7,500 interested people, neighbors,

and customers came to ALTANA’s and BYK’s headquarters in

Wesel, a record number of visitors. There was a wide-ranging

offer for both adults and children. Laboratory experiments

and informative tours of production gave visitors diverse, inter-

esting, and not-everyday insights into the world of chem-

istry. A colorful stage program, participatory events for chil-

dren, and a performance demonstration by the Wesel fire

de partment were among the highlights. BYK rounded off the

proceeds from token sales to 10,000 euros and donated

the sum to the Löwenzahn & Pusteblume booster club for

pediatric palliative medicine.

In Grevenbroich, more than 400 visitors used the Open

House Day to tour the manufacturing and laboratory

facilities, finding out how ACTEGA Rhenania products are

developed and produced. The products are used world-

wide in packaging for many foods. In a coatings training

session, visitors gained deeper insights into the world of

coatings, and in a special “children’s laboratory” kids could

witness exciting experiments. A diverse framework pro-

gram rounded off the Open House Day. ACTEGA Rhenania

topped up the income from the sale of food and drinks

and donated the money to the Grevenbroich-based Tafel

Existenzhilfe, which distributes food to people in need,

and to Haus St. Stephanus, which assists youth and the

handicapped.

The doors were also open to the public at BYK’s sites

in Wesel-Emmelsum, Kempen, and Schkopau, at ACTEGA’s

site in Lehrte, and at ELANTAS’ Hamburg site.

Social Engagement and Donations

ELANTAS Beck India has sponsored a number of projects over

a longer period of time. The projects focus on the fields

of education, health, and hygiene. For example, support from

ELANTAS Beck India enabled a school in the village of

Pungam and a school in Ankleshwar to be refurbished and

new toilet facilities to be built. In other villages and schools,

new sanitary facilities for students, a water treatment plant,

and computer-learning technologies in the form of so-

called e-learning kits were financed. In the slums of the city

of Pune, the company supports an initiative that kindles

children’s interest in curricular and extracurricular learning

offers and shows them the importance of education.

In addition, ELANTAS Beck India works with the charity

organization Suhrud Mandal. ELANTAS Beck India pro-

vided the organization with funding for printing schoolbooks

for hearing-impaired children throughout the state of

Maharashtra. Among the seven partnerships that ELANTAS

Beck India supports within the framework of its commit-

ment to sustainability is the educational initiative Swadhar

IDWC, which with its program enables girls from socially

weak classes to receive an education, strengthens their confi-

dence, and thus enables them to be role models for other

people in society. In 2018, the company supported nine par-

ticipants in the educational program.


In social projects at its U.S. site in St. Louis, ELANTAS PDG

provides assistance and at the same time strengthens em-

ployees’ personal commitment. An example is the monthly

donations by employees to the aid organization United

Way Worldwide, which the company tops up. Each year,

ELANTAS PDG participates in the fall in the traditional

World Food Day, on which employees pack food packages

for needy people. At Christmastime, the company takes

part in a Christmas campaign for poor families in St. Louis.

The employees bring gifts that have been collected to

the families’ homes.

In the context of the annual ECKART Christmas dona-

tion campaign “Donations Instead of Gifts,” a total of

20,000 euros were provided to four organizations. Three

children’s aid organizations and an inclusion project of

a gymnastics and sports club near the site each received

5,000 euros.

98 Social Commitment

100

101

102

104

106






Consolidated Financial Statements(condensed version)

The consolidated financial statements of the annual report have been prepared by the

Management Board of ALTANA AG, which is responsible for the completeness and accuracy

of the information contained therein.

The consolidated financial statements have been prepared in accordance with the Inter-

national Financial Reporting Standards (IFRS), as endorsed by the EU and in accordance

with the requirements of German commercial law pursuant to section 315e of the German

Commercial Code (HGB).

The information contained in the consolidated financial statements and the Group

Management Report is based on the information reported, in accordance with consistent

guidelines in force throughout the Group by the companies included in the consolidated

financial statements. The integrity of the reporting process is safeguarded by effective inter-

nal control systems established at these companies under the direction of the Manage-

ment Board. This assures a true and fair view of the performance and results of the Group and

enables the Management Board to recognize potential investment risks and negative

developments at an early stage and take appropriate countermeasures.

By resolution of the Annual General Meeting, the Chairman of the Audit Committee of

the Supervisory Board appointed PricewaterhouseCoopers GmbH Wirtschaftsprüfungsgesell-

schaft as independent auditors of the consolidated financial statements. The auditors issued

an unqualified auditors’ report on the complete consolidated financial statements and the

Group management report. The consolidated financial statements, the Group Manage-

ment Report and the auditors’ report have been made available to the Supervisory Board for

detailed discussion. The report of the Supervisory Board is contained on pages 16 – 19 of

the Corporate Report 2018.

To the best of our knowledge and in accordance with the applicable reporting principles the

consolidated financial statements give a true and fair view of the net assets, financial posi-

tion, and results of operations of the Group and the Group Management Report includes a

fair review of the development and performance of the business and the position of the

Group, together with a description of the principal opportunities and risks associated with

the expected development of the Group.

Wesel, Germany, February 26, 2019

ALTANA AG

The Management Board

Martin Babilas Stefan Genten Dr. Christoph Schlünken


Management Board Responsibility Statement I ALTANA Group Consolidated Income Statement100


Notes 2017 2018

in € thousand

Net sales 4 2,246,956 2,307,399

Cost of sales 5 (1,371,573) (1,463,627)

Gross profit 875,383 843,772

Selling and distribution expenses 6 (288,653) (291,228)

Research and development expenses (142,484) (154,127)

General administration expenses (118,466) (108,571)

Other operating income 7 23,498 16,737

Other operating expenses 8 (13,359) (10,825)

Operating income (EBIT) 335,919 295,758

Financial income 9 7,092 4,898

Financial expenses 10 (15,684) (12,110)

Financial result (8,592) (7,212)

Income from at equity accounted investments (21,301) (24,460)

Income before income taxes (EBT) 306,026 264,086

Income taxes 11 (71,382) (77,097)

Net income (EAT) 234,644 186,989

thereof attributable to non-controlling interests 1,829 1,975

thereof attributable to the shareholder of ALTANA AG 232,815 185,014



Assets Notes Dec. 31, 2017 Dec. 31, 2018

in € thousand

Intangible assets 13 1,056,943 1,044,217

Property, plant and equipment 14 774,405 868,162

Long-term investments 15 63,227 22,323

Investments in at equity accounted companies 16 96,705 117,869

Income tax refunds 169

Deferred tax assets 11 18,645 20,496

Other non-current assets 21 11,479 10,667

Total non-current assets 2,021,573 2,083,734

Inventories 17 330,170 373,027

Trade accounts receivable 18 371,911 384,180

Income tax refunds 8,671 12,832

Other current assets 21 118,113 103,836

Marketable securities 19 18,730 21,907

Short-term financial assets 20 2,074 2,690

Cash and cash equivalents 275,671 239,652

Assets held for sale 797

Total current assets 1,126,137 1,138,124

Total assets 3,147,710 3,221,858

102 ALTANA Group Consolidated Statement of Financial Position

Liabilities, provisions and shareholders’ equity Notes Dec. 31, 2017 Dec. 31, 2018

in € thousand

Share capital ¹ 136,098 136,098

Additional paid-in capital 151,276 151,276

Retained earnings 1,864,798 1,974,331

Accumulated other comprehensive income 51,963 71,359

Equity attributable to the shareholder of ALTANA AG 2,204,135 2,333,064

Non-controlling interests 10,065 11,553

Shareholders’ equity 22 2,214,200 2,344,617

Non-current debt 24 134,973 62,959

Employee benefit obligations 25 224,230 220,429

Other non-current provisions 26 18,366 20,331

Deferred tax liabilities 11 84,252 85,462

Other non-current liabilities 27 24,787 27,862

Total non-current liabilities 486,608 417,043

Current debt 24 69,269 82,641

Trade accounts payable 192,016 195,351

Current accrued income taxes 33,915 41,212

Other current provisions 26 104,237 87,479

Other current liabilities 27 47,465 53,515

Total current liabilities 446,902 460,198

Total liabilities, provisions and shareholders’ equity 3,147,710 3,221,858

¹ Share capital consists of 136,097,896 no-par value shares.



Notes 2017 2018

in € thousand

Net income (EAT) 234,644 186,989

Depreciation and amortization of intangible assets and property,plant and equipment 13, 14 133,637 134,842

Impairment of intangible assets, property, plant and equipmentand assets held for sale 13, 14 451

Change in fair value of financial assets and securities 10 (27)

Net result from the disposal of intangible assets and property,plant and equipment 7, 8 316 (1,414)

Net result from the disposal of long-term investments andmarketable securities 9 (17) (55)

Change in inventories 17 (40,673) (40,369)

Change in trade accounts receivable 18 (32,521) (11,379)

Change in income taxes 11 (29,746) 1,723

Change in provisions 25, 26 (528) (14,411)

Change in trade accounts payable 24,702 2,367

Change in other assets and other liabilities 21, 27 (8,951) 11,804

Other 20,951 26,165

Cash flow from operating activities 302,265 296,235

Capital expenditure on intangible assets and property,plant and equipment 13, 14 (187,964) (186,988)

Proceeds from the disposal of intangible assets and property,plant and equipment 13, 14 1,085 5,843

Acquisitions, net of cash acquired 3 (140,695) (3,126)

Purchase of long-term investment and investments in at equity companies 15, 16 (30,454) (54,901)

Proceeds from the disposal of long-term investments 15 43 54

Payments on long-term loans (54,000) (23,010)

Proceeds from long-term loans 98 71,014

Purchase of marketable securities 19 (32,456) (31,339)

Proceeds from the disposal of marketable securities 9, 10 28,575 27,462

Change in short-term financial assets 90,652 (700)

Cash flow from investing activities (325,116) (195,691)

104 ALTANA Group Consolidated Statement of Cash Flows

Notes 2017 2018

in € thousand

Dividends paid (121) (80,111)

Proceeds from issuance of long-term debt 24 8,383

Repayment of long-term debt 24 (1,892) (67)

Net increase / decrease in short-term debt 24 (65,422) (64,144)

Cash flow from financing activities (67,435) (135,939)

Effect of exchange rate changes (9,649) (624)

Change in cash and cash equivalents (99,935) (36,019)

Cash and cash equivalents as of January 1 2 375,606 275,671

Cash and cash equivalents as of December 31 2 275,671 239,652

Additional information on cash flows included in the cash flows from operating activities

Income taxes paid (114,219) (80,603)

Interest paid (8,260) (3,916)

Income taxes received 4,500 5,966

Interest received 4,754 2,226

Dividends received 1,061 962



The consolidated financial statement to the Corporate Report 2018 are provided online at

www.altana.com/consolidated_financial_statements_2018



Independent Auditors’ Report


ALTANA Group Consolidated Statement of Comprehensive Income


ALTANA Group Consolidated Statement of Changes in Shareholders’ Equity


Notes to Consolidated Financial Statements

1. Basis of Presentation

2. Significant Accounting Policies

3. Business Combinations and Disposals

4. Net Sales

5. Cost of Sales

6. Selling and Distribution Expenses

7. Other Operating Income

8. Other Operating Expenses

9. Financial Income

10. Financial Expenses

11. Income Taxes

12. Other Information on the Income Statement

13. Intangible Assets

14. Property, Plant and Equipment

15. Long-term Investments

16. Investments in at Equity Accounted Companies

17. Inventories

18. Trade Accounts Receivable

19. Marketable Securities

20. Short-term Financial Assets

21. Other Assets

22. Shareholders’ Equity

23. Employee Incentive Plans

24. Debt

25. Employee Benefit Obligations

26. Other Provisions

27. Other Liabilities

28. Additional Disclosures for Financial Instruments

29. Commitments and Contingencies

30. Related Party Transactions

31. Compensation of the Supervisory Board and Management Board

32. Fees Paid to the Auditor

33. Subsequent Events

34. Additional Information

Supervisory Board of ALTANA AG

Supervisory Board Committees

Management Board of ALTANA AG

106 Reference to the Consolidated Financial Statements

108

110

Multi-Year Overview


Multi-Year Overview

Key figures at a glance

2009 2010 2011 2012 2013 2014 2015 2016 2017 2018

in € million

Sales 1,181.7 1,535.4 1,616.7 1,705.3 1,765.4 1,952.3 2,059.3 2,075.3 2,247.0 2,307.4

Earnings before interest, taxes, depreciation and amortization (EBITDA) 208.4 314.1 308.0 323.2 335.7 397.4 390.9 453.0 470.0 430.6

EBITDA margin 17.6 % 20.5 % 19.1 % 19.0 % 19.0 % 20.4 % 19.0 % 21.8 % 20.9 % 18.7 %

Operating income (EBIT) 53.5 230.2 217.0 226.9 229.1 267.7 251.3 328.7 335.9 295.8

EBIT margin 4.5 % 15.0 % 13.4 % 13.3 % 13.0 % 13.7 % 12.2 % 15.8 % 14.9 % 12.8 %

Earnings before taxes (EBT) 39.0 218.2 207.7 217.2 212.6 251.8 227.8 299.8 306.0 264.1

EBT margin 3.3 % 14.2 % 12.8 % 12.7 % 12.0 % 12.9 % 11.1 % 14.4 % 13.6 % 11.4 %

Net income (EAT) 11.0 152.3 147.5 154.7 151.6 179.2 158.0 210.1 234.6 187.0

EAT margin 0.9 % 9.9 % 9.1 % 9.1 % 8.6 % 9.2 % 7.7 % 10.1 % 10.4 % 8.1 %

Research and development expenses 70.6 82.0 87.7 102.3 109.4 113.9 128.1 129.3 142.5 154.1

Capital expenditure on intangible assets, property, plant and equipment 54.0 73.8 93.5 89.8 94.3 90.4 85.6 122.1 188.0 187.0

Cash flow from operating activities 224.6 238.6 170.0 274.5 258.8 298.2 346.1 376.7 302.3 296.2

Return on Capital Employed (ROCE) 7.6 % 12.2 % 11.2 % 10.8 % 9.9 % 10.3 % 10.1 % 11.6 % 11.3 % 9.4 %

ALTANA Value Added (AVA) (5.4) 64.2 53.2 50.0 38.7 51.9 49.2 83.3 84.0 37.6

Total assets (Dec. 31) 1,707.8 1,943.6 2,001.9 2,121.3 2,546.0 2,756.2 2,964.5 3,053.9 3,147.7 3,221.9

Shareholders’ equity (Dec. 31) 1,177.6 1,364.2 1,417.1 1,498.2 1,565.6 1,745.5 1,935.6 2,082.2 2,214.2 2,344.6

Net debt (-) / Net financial assets (+) ¹ (Dec. 31) (55.0) 79.7 (26.8) 68.2 (303.6) (280.1) (114.2) 25.7 (78.0) (95.6)

Headcount (Dec. 31) 4,789 4,937 5,313 5,363 5,741 6,064 6,096 5,967 6,186 6,428


Sales by region

2009 2010 2011 2012 2013 2014 2015 2016 2017 2018

in € million

Europe 555.1 683.7 740.8 751.7 745.2 795.1 795.6 798.6 852.3 875.0

thereof Germany 188.0 234.5 258.5 266.1 262.4 276.7 269.8 263.2 275.7 273.4

Americas 267.7 361.5 373.3 412.0 438.4 527.1 607.1 587.2 623.6 624.4

thereof U.S. 178.4 242.0 243.2 268.4 289.5 365.0 416.1 398.8 436.3 434.8

Asia 317.9 439.0 447.7 509.6 547.4 593.0 618.9 652.3 733.5 769.4

thereof China 164.3 224.2 228.5 252.5 287.8 309.8 315.6 336.0 399.0 421.2

Other regions 41.0 51.2 54.9 31.9 34.3 37.0 37.7 37.2 37.6 38.6

Change in country allocation as of 2012

Sales by division

2009 2010 2011 2012 2013 2014 2015 2016 2017 2018

in € million

BYK 419.9 541.2 581.9 618.4 691.5 856.7 870.0 909.1 1,030.4 1,065.6

ECKART 282.3 356.6 346.8 340.5 334.6 332.2 349.7 361.9 385.3 382.6

ELANTAS 272.7 377.4 390.9 412.5 414.6 431.2 463.2 452.1 488.7 506.6

ACTEGA 206.8 260.2 297.0 333.9 324.7 332.1 376.4 352.2 342.6 352.6

108 Multi-Year Overview

Key figures at a glance

2009 2010 2011 2012 2013 2014 2015 2016 2017 2018

in € million

Sales 1,181.7 1,535.4 1,616.7 1,705.3 1,765.4 1,952.3 2,059.3 2,075.3 2,247.0 2,307.4

Earnings before interest, taxes, depreciation and amortization (EBITDA) 208.4 314.1 308.0 323.2 335.7 397.4 390.9 453.0 470.0 430.6

EBITDA margin 17.6 % 20.5 % 19.1 % 19.0 % 19.0 % 20.4 % 19.0 % 21.8 % 20.9 % 18.7 %

Operating income (EBIT) 53.5 230.2 217.0 226.9 229.1 267.7 251.3 328.7 335.9 295.8

EBIT margin 4.5 % 15.0 % 13.4 % 13.3 % 13.0 % 13.7 % 12.2 % 15.8 % 14.9 % 12.8 %

Earnings before taxes (EBT) 39.0 218.2 207.7 217.2 212.6 251.8 227.8 299.8 306.0 264.1

EBT margin 3.3 % 14.2 % 12.8 % 12.7 % 12.0 % 12.9 % 11.1 % 14.4 % 13.6 % 11.4 %

Net income (EAT) 11.0 152.3 147.5 154.7 151.6 179.2 158.0 210.1 234.6 187.0

EAT margin 0.9 % 9.9 % 9.1 % 9.1 % 8.6 % 9.2 % 7.7 % 10.1 % 10.4 % 8.1 %

Research and development expenses 70.6 82.0 87.7 102.3 109.4 113.9 128.1 129.3 142.5 154.1

Capital expenditure on intangible assets, property, plant and equipment 54.0 73.8 93.5 89.8 94.3 90.4 85.6 122.1 188.0 187.0

Cash flow from operating activities 224.6 238.6 170.0 274.5 258.8 298.2 346.1 376.7 302.3 296.2

Return on Capital Employed (ROCE) 7.6 % 12.2 % 11.2 % 10.8 % 9.9 % 10.3 % 10.1 % 11.6 % 11.3 % 9.4 %

ALTANA Value Added (AVA) (5.4) 64.2 53.2 50.0 38.7 51.9 49.2 83.3 84.0 37.6

Total assets (Dec. 31) 1,707.8 1,943.6 2,001.9 2,121.3 2,546.0 2,756.2 2,964.5 3,053.9 3,147.7 3,221.9

Shareholders’ equity (Dec. 31) 1,177.6 1,364.2 1,417.1 1,498.2 1,565.6 1,745.5 1,935.6 2,082.2 2,214.2 2,344.6

Net debt (-) / Net financial assets (+) ¹ (Dec. 31) (55.0) 79.7 (26.8) 68.2 (303.6) (280.1) (114.2) 25.7 (78.0) (95.6)

Headcount (Dec. 31) 4,789 4,937 5,313 5,363 5,741 6,064 6,096 5,967 6,186 6,428


Sales by region

2009 2010 2011 2012 2013 2014 2015 2016 2017 2018

in € million

Europe 555.1 683.7 740.8 751.7 745.2 795.1 795.6 798.6 852.3 875.0

thereof Germany 188.0 234.5 258.5 266.1 262.4 276.7 269.8 263.2 275.7 273.4

Americas 267.7 361.5 373.3 412.0 438.4 527.1 607.1 587.2 623.6 624.4

thereof U.S. 178.4 242.0 243.2 268.4 289.5 365.0 416.1 398.8 436.3 434.8

Asia 317.9 439.0 447.7 509.6 547.4 593.0 618.9 652.3 733.5 769.4

thereof China 164.3 224.2 228.5 252.5 287.8 309.8 315.6 336.0 399.0 421.2

Other regions 41.0 51.2 54.9 31.9 34.3 37.0 37.7 37.2 37.6 38.6

Change in country allocation as of 2012

Sales by division

2009 2010 2011 2012 2013 2014 2015 2016 2017 2018

in € million

BYK 419.9 541.2 581.9 618.4 691.5 856.7 870.0 909.1 1,030.4 1,065.6

ECKART 282.3 356.6 346.8 340.5 334.6 332.2 349.7 361.9 385.3 382.6

ELANTAS 272.7 377.4 390.9 412.5 414.6 431.2 463.2 452.1 488.7 506.6

ACTEGA 206.8 260.2 297.0 333.9 324.7 332.1 376.4 352.2 342.6 352.6

109Multi-Year Overview


By participating in the UN initiative Global Compact, we commit to respecting human

rights, creating socially compatible working conditions, promoting environmental protection,

and fighting corruption.

Principle Page Measure taken

Human Rights

Principle 1 Businesses should support and respect the protection of internationally proclaimed human rights

8 – 10, 12 – 13, 94

FFS ¹, pp. 9, 27 – 29Sustainable Development Goals (SDG 8),

ALTANA’s Guiding Principles and leadership guidelines,

Compliance Management System,women in leadership positions

Principle 2 Make sure that they are not complicit in human rights abuses

7, 12 – 13

FFS ¹, pp. 23 – 24, 27 – 29

Code of Conduct,sustainability assessments,

search for suppliers, supplier agreements

Labor

Principle 3 Businesses should uphold the freedom of association and the effective recognition of the right to collective bargaining

12 – 13

FFS ¹, pp. 27 – 29Compliance Management System,

Corporate guideline HR

Principle 4 The elimination of all forms of forced and compulsory labor

12 – 13

FFS ¹, pp. 27 – 30

Compliance Management System

Principle 5 The abolition of child labor

7, 12 – 13, 96 – 98

FFS ¹, pp. 23 – 24, 29sustainability assessments,

Compliance Management System, support of education initiatives

Principle 6 The elimination of discrimination in respect of employment and occupation

7 – 10, 12 – 13

FFS ¹, pp. 27 – 30Sustainable Development Goals (SDG 5),

Compliance Management System, training, sustainability assessments and audits, surveys

Environment

Principle 7 Businesses should support a precautionary approach to environmental challenges

8 – 10, 81 – 83,

89 – 91 FFS ¹, pp. 2 – 7,

13 – 15

Sustainable Development Goals (SDG 13),

sustainable product development, energy and environmental management

systems, environmental key performance indicators system with targets,

energy efficiency analyses

Principle 8 Undertake initiatives to promote greater environmental responsibility

8 – 10, 81 – 83,

89 – 91 FFS ¹, pp. 2 – 7,

17 – 23

Sustainable Development Goals (SDG 13),sustainable product development,

process optimizations, capital expenditure, environmental key

performance indicators system with targets

Principle 9 Encourage the development and diffusion ofenvironmentally friendly technologies

8 – 10, 81 – 83

FFS ¹, pp. 31 – 32Sustainable Development Goals (SDG 9),

product and technology innovations,alternatives to critical materials

Anti-Corruption

Principle 10 Businesses should work against corruption in all its forms, including extortion and bribery

7, 12 – 13

FFS ¹, pp. 27 – 30Code of Conduct, Compliance

Management System, training and audits

¹ Facts and Figures on Sustainability 2018 (Online document)

110 Global Compact: Communication on Progress (COP)


Products80

Safety and Health84

Environment88

Human Resources92

Social Commitment95



ALTANA AG

Abelstr. 43


Tel + 49 281 670 - 10900

Fax + 49 281 670 - 10999

www.altana.com

Contact


Tel + 49 281 670 - 10900

Fax + 49 281 670 - 10999

[email protected]

Co

rpo

rate

Rep

ort

201

8

Table of Contents


About This Report







Group Basics



Subsequent Events


Products

Safety and Health

Environment

Human Resources

Social Commitment


(condensed version)






Multi-Year Overview


1

6

7

11

14

16

21

46

47

53

66

70

71

80

84

88

92

95

99

100

101

102

104

106

108

110

Credits

Publisher

ALTANA AG


Tel + 49 281 670 - 8

Fax + 49 281 670 - 10999

[email protected]

www.altana.com







from BYK.

Design

Heisters & Partner


Photography


34 – 38, 40 – 45)

ECKART GmbH (p. 27)


(pp. 23 – 25, 30 – 33)



123 RF (p. 39)

Printing



Gro

up P

rofi l

e 20

18

ALT

AN

A w

orld

wid

e

Group Profi le 2018


2017 2018 ∆ %

in € million

Sales 2,247.0 2,307.4 3






EBT margin 13.6 % 11.4 %

Net income (EAT) 234.6 187.0 - 20

EAT margin 10.4 % 8.1 %






Dec. 31, 2017 Dec. 31, 2018 ∆ %

in € million

Total assets 3,147.7 3,221.9 2



Headcount ² 6,186 6,428 4




2017 2018 ∆ %



4.01 3.67 - 8



3.06 2.69 - 12






ALTANA worldwide


South America


100 %


100 %

U.S.


100 %


100 %


100 %


100 %


100 %


Asia


100 %


100 %


100 %


100 %


100 %


100 %


100 %


100 %


75 %


100 %


100 %


100 %


100 %

Germany

ALTANA AG, Wesel



100 %


100 %




100 %


100 %


100 %



100 %


100 %

Europe


100 %


100 %


100 %


100 %


100 %


100 %


100 %


100 %


100 %


100 %

Central America


100 %


100 %


100 %

Sales by region

in € million 2018

1 Europe 875.0

2 Americas 624.4

3 Asia 769.4


Total 2,307.4

1

4

227.1 %37.9 %

1.7 % 333.3 %

Sales by division

in € million 2018

1 BYK 1,065.6

2 ECKART 382.6

3 ELANTAS 506.6

4 ACTEGA 352.6

Total 2,307.4

1

4

2

3

16.6 %

21.9 %

46.2 %

15.3 %

Gro

up P

rofi l

e 20

18

ALT

AN

A w

orld

wid

e

Group Profi le 2018


2017 2018 ∆ %

in € million

Sales 2,247.0 2,307.4 3






EBT margin 13.6 % 11.4 %

Net income (EAT) 234.6 187.0 - 20

EAT margin 10.4 % 8.1 %






Dec. 31, 2017 Dec. 31, 2018 ∆ %

in € million

Total assets 3,147.7 3,221.9 2



Headcount ² 6,186 6,428 4




2017 2018 ∆ %



4.01 3.67 - 8



3.06 2.69 - 12






ALTANA worldwide


South America


100 %


100 %

U.S.


100 %


100 %


100 %


100 %


100 %


Asia


100 %


100 %


100 %


100 %


100 %


100 %


100 %


100 %


75 %


100 %


100 %


100 %


100 %

Germany

ALTANA AG, Wesel



100 %


100 %




100 %


100 %


100 %



100 %


100 %

Europe


100 %


100 %


100 %


100 %


100 %


100 %


100 %


100 %


100 %


100 %

Central America


100 %


100 %


100 %

Sales by region

in € million 2018

1 Europe 875.0

2 Americas 624.4

3 Asia 769.4


Total 2,307.4

1

4

227.1 %37.9 %

1.7 % 333.3 %

Sales by division

in € million 2018

1 BYK 1,065.6

2 ECKART 382.6

3 ELANTAS 506.6

4 ACTEGA 352.6

Total 2,307.4

1

4

2

3

16.6 %

21.9 %

46.2 %

15.3 %


Products80

Safety and Health84

Environment88

Human Resources92

Social Commitment95



ALTANA AG

Abelstr. 43


Tel + 49 281 670 - 10900

Fax + 49 281 670 - 10999

www.altana.com

Contact


Tel + 49 281 670 - 10900

Fax + 49 281 670 - 10999

[email protected]

Co

rpo

rate

Rep

ort

201

8

Table of Contents


About This Report







Group Basics



Subsequent Events


Products

Safety and Health

Environment

Human Resources

Social Commitment


(condensed version)






Multi-Year Overview


1

6

7

11

14

16

21

46

47

53

66

70

71

80

84

88

92

95

99

100

101

102

104

106

108

110

Credits

Publisher

ALTANA AG


Tel + 49 281 670 - 8

Fax + 49 281 670 - 10999

[email protected]

www.altana.com







from BYK.

Design

Heisters & Partner


Photography


34 – 38, 40 – 45)

ECKART GmbH (p. 27)


(pp. 23 – 25, 30 – 33)



123 RF (p. 39)

Printing



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